SUMMER MARKET

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Housing’s Summer Market has arrived, and with it comes an increase in inventory, a slight decrease in demand, and a rise in the market time.

 

During the summer market, demand decreases slightly with all the distractions. For many buyers, it still feels as busy as ever, but the numbers illustrate a drop in demand regardless. With a decrease in demand, the number of available homes rises as more homes continue to come on the market. Many sellers mistake summer as the best time of the year for housing. With a drop in demand and a rising inventory, the Expected Market Time grows longer. The overall speed of the market slows a touch.

 

Buyers may conclude that the market will slow down enough to line up in their favor. That will not be the case. Negotiations will continue to favor sellers, yet the unbelievable housing pace will slow. As the Summer Market progresses, housing will not be as instantaneous. In the hottest price ranges, anything below $1.5 million, many homes that would have sold after the initial weekend will take an extra week to sell. Homes will still procure plenty of traffic, multiple offers, and sales prices above their asking prices. The market transformation will be characterized by fewer showings, slightly fewer offers generated, and not as many sales above their list prices.

 

In the coming weeks, buyers, sellers, and everyone connected to the real estate market will feel a slight slowdown in housing. They will scratch their collective heads and wonder what is going on. No, housing is not suddenly shifting completely in the buyer’s favor. Instead, it is shifting to a new cyclical season of the year: SUMMER.

 

 

 

• The active listing inventory in the past couple of weeks increased by six homes, nearly unchanged, and now sits at 2,196. It is the lowest level for a start to June since tracking began in 2004. In May, 45% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,879 less. Last year, there were 3,059 homes on the market, 863 more homes, or 39% higher. The 3-year average before COVID (2017 to 2019) was 6,501, or 196% more, nearly triple.
• Demand, the number of pending sales over the prior month, decreased by 70 pending sales in the past two weeks, down 4%, and now totals 1,595, the lowest level for a start to June since tracking began in 2004. It was also the largest drop of the year. Last year, there were 2,020 pending sales, 27% more than today. The 3-year average before COVID (2017 to 2019) was 2,766, or 73% more.
• With demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 39 to 41 days in the past couple of weeks. It was 45 days last year, similar to today, but was rapidly cooling with skyrocketing rates. It is the first time that the Expected Market Time has been lower than the prior year since March 2022.
• For homes priced below $750,000, the Expected Market Time increased from 27 to 28 days. This range represents 19% of the active inventory and 27% of demand.
• For homes priced between $750,000 and $1 million, the Expected Market Time increased from 25 to 27 days. This range represents 15% of the active inventory and 23% of demand.
• For homes priced between $1 million to $1.25 million, the Expected Market Time increased from 28 to 30 days. This range represents 10% of the active inventory and 14% of demand.
• For homes priced between $1.25 million to $1.5 million, the Expected Market Time increased from 33 to 35 days. This range represents 10% of the active inventory and 12% of demand.
• For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 46 to 50 days. This range represents 13% of the active inventory and 11% of demand.
• For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks decreased from 79 to 76 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 149 to 163 days. For homes priced above $6 million, the Expected Market Time increased from 267 to 274 days.
• The luxury end, all homes above $2 million, account for 33% of the inventory and 13% of demand.
• Distressed homes, both short sales and foreclosures combined, comprised only 0.4% of all listings and 0.2% of demand. Only two foreclosures and six short sales are available today in Orange County, with eight total distressed homes on the active market, down six from two weeks ago. Last year there were six distressed homes on the market, identical to today.