Orange County Housing Report: Driven by low mortgage rates, a surge of buyers compete amidst record-low inventory
The following article includes views from Reports on Housing by Steven Thomas, economics expert and experienced real estate executive, and is not a reflection of the opinions, views, or predictions of Nuvision and its representatives.
Prospective homebuyers in today’s market have a lot to think about. After putting in an offer, they not only have to consider whether the homeowner will accept it, but they also have to hope other buyers haven’t offered more. Many times, even a full-price offer isn’t enough, and the home goes to the buyer with a counteroffer above the asking price.
Like in an auction, many interested buyers drive the price up to a point none of them had initially been willing to pay for the item. With no lack of interest, new homes hitting the market are selling at record speeds.
Demand continues to increase as inventory drops to record levels.
The winter market is typically marked by both reduced inventory and demand. But not this year. The current demand is up 26% from just a few weeks ago and 16% from this time last year. It is at the strongest reading for the winter since 2013, yet there is a key difference between now and then. In 2013, there were 783 more homes on the market.
This year’s gap between supply and demand is unprecedented. Compared to last year, there are 1,512 fewer homes on the market. Such low inventory means there just aren’t enough homes available to satisfy the unusually high demand.
The main culprit for the skyrocketing demand is low mortgage rates. The amount of potential savings in annual and monthly payments have drawn many new buyers into the market. As for the low inventory, most homeowners prefer to wait until spring to list their homes. When the spring market begins on March 20th, we should expect a trickle of new homes to hit the market.
Expected Market Time has dropped to 29 days in just the past two weeks.
Two weeks ago, the average home would sit on the market for about 38 days before selling. Today, it’ll be there for only 29 days—the quickest time since tracking began in 2004.
With such a dramatically low Expected Market Time, we are in a very Hot Seller’s Market. Home showings are through the roof. Such a vast amount of potential buyers means sellers have more power in the negotiating process.
Since demand is expected to continue increasing through spring and peak in May, this Hot Seller’s Market likely isn’t going anywhere for some time.
A tip for sellers: Be smart about pricing to take advantage of this moment
For the past few months, sellers have been advised to maintain their home price at Fair Market Value. This advice still holds true.
Overpricing your home means fewer offers will be made, and you won’t be able to take advantage of a bidding war, which is what really drives the price up. When you price your home at Fair Market Value, multiple interested buyers often means the sale price will end up higher than your asking price. You don’t need to try and artificially force this to happen by listing your home for higher.
YOU HAVE QUESTIONS; WE HAVE ANSWERS!
We invite you to join us on March 4th 2021 at 10:30 AM as we bring in leading local economic and housing expert Steven Thomas to discuss exactly what’s happening with the Orange County housing market and where he sees things going as we head into the Spring and Summer of 2021.