Multiple offers and sales price at or above their list prices is the norm for homes priced below $1 million (81% of all closed sales in 2017). It has been a deep seller’s market for years now with nothing indicating a change on the horizon. Buyers will have to continue to navigate the harsh reality of plenty of competition with very few choices.
Let’s take a look at the Market Stats:
On New Year’s Day, the active listing inventory was at 3,397 homes, the second lowest start in the past 13 years. Only 2013 was lower, with 3,161 homes on the market. With such an anemic inventory, the biggest worry to start the year was that 2018 would shape up to be just like 2013. In 2013, the inventory did not increase much at all for the first three months and the market heavily favored sellers (typically, the inventory rises from January through mid-August).
Yet, 2018 is shaping up to be completely different than 2013. Since starting the year at 3,397 homes, the active inventory has increased by 9%, adding an additional 310 homes, and now totals 3,707. The expected market time is currently at 77 days, quite a bit slower than the 45 day expected market time at the beginning of 2013. It is not as deep of a seller’s market; so, homes will not appreciate as fast as they did in 2013.
Carefully pricing is a fundamental ingredient in achieving the objective in selling a home. In December, 59% of all closed sales had to reduce the asking price at least once. It was not the time of the year; it was the inability for many sellers to price their homes accurately right out of the gate.
From here, we can expect the inventory to continuously rise from now through mid-Summer. It will fall short of the long-term average of 8,000 homes, which is where the inventory needs to be for an extended period of time for the market to transition into a balanced market, one that does not favor a buyer or seller.
In the past two weeks, demand, the number of new escrows over the prior month, decreased by 158 pending sales, or 10%, and now totals 1,447. This is a true reflection of cyclically the slowest time of the year, the last 30-days. This period encompasses all of the holidays and all of its distractions. Last year at this time, demand was at 1,562 pending sales, 115 more than today, or 8%.
Expected Market Time
The expected market time, the amount of time it would take for a home that comes onto the market today to be placed into escrow, increased from 67 to 77 days, a slight seller’s market with mild appreciation. Last year’s expected market time was at 84 days. The expected market time will significantly drop by the end of this month.
There were 2,269 closed residential resales in December, down by 9% from December 2016’s 2,484 closed sales. The sales to list price ratio was 97.3% for all of Orange County.
Whatever your real estate needs are in 2018, feel free to call, text or send me an email. Thank you for watching my video and make it a great day!