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Orange County Housing Report:  Summer Slowdown

 The shift in housing due to higher rates has already made a significant impact on the housing market, and it will slow further over the summer.

 

Housing Will Continue to Cool

Since demand’s early peak at the end of May, the Expected Market Time has jumped from 20 to 45 days, growing by more than 3-weeks.

Road trip!! Living in California, it is of no surprise that so many families climb into their SUVs, packed to the gills with luggage, and explore the Golden State. After traveling 70-plus miles per hour for hours without a break, there comes a point where it is time to get off at the next exit, fuel up, and stretch the legs. Upon exiting the freeway and driving to the gas station at a…

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Orange County Housing Report:  Affordability Challenges

When escalating home prices are matched with much higher mortgage rates, home affordability dramatically weakens and results in fewer buyers able to make a purchase.

Demand is Dropping Due to Affordability

Lower rates had propped up affordability, yet today’s higher interest rate environment is impacting demand as many home buyers struggle to afford the monthly payment.

In May of 2021, a gallon of gas cost $4.07. In January of this year, it had increased to $4.59, a rise of 52 cents in 8 months. It climbed to $5.66 a gallon in April, and then to $6.17 in May. That is a $1.58 jump in 4 months. Everyone is acutely aware of soaring prices at the pump. As consumers feel the strain in…

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Orange County Housing Report:  Affordability Challenges

When escalating home prices are matched with much higher mortgage rates, home affordability dramatically weakens and results in fewer buyers able to make a purchase.

Demand is Dropping Due to Affordability

Lower rates had propped up affordability, yet today’s higher interest rate environment is impacting demand as many home buyers struggle to afford the monthly payment.

In May of 2021, a gallon of gas cost $4.07. In January of this year, it had increased to $4.59, a rise of 52 cents in 8 months. It climbed to $5.66 a gallon in April, and then to $6.17 in May. That is a $1.58 jump in 4 months. Everyone is acutely aware of soaring prices at the pump. As consumers feel the strain in…

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Orange County Housing Report:  The Sky: NOT Falling

 

Many are jumping to extreme conclusions about the impact of higher rates, high inflation, and a potential recession on the housing market.

A Seller’s Market Will Prevail

While the market is slowing, it is gradually evolving from its out of control, insane pace, to a normal Seller’s Market where pricing will be fundamental in finding success.

In flipping open a Merriam-Webster Dictionary and looking up “Chicken Little,” it states, “one who warns or predicts calamity especially without justification.” Economists are used to the constant chatter about recessions, bubbles, and plunging home prices. The current economic environment has amplified the noise: surging interest rates, highest…

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Unexpected Slump in Demand

Higher 30-year mortgage rates are having a major impact on Orange County demand, now at levels far below typical spring

 

Demand Slumping

Over the past month, demand dropped by 6% when it normally rises by 4%.

In 2002, the Los Angeles Angels won the World Series for the first time in franchise history. The next year they missed the playoffs completely with a losing record. After hoisting the Commissioner’s Trophy the year before as champions of the world, they missed post season play due to a slump in wins to close out the year from July through September. The Orange County housing market is amid a similar slump in the middle of the Spring Market following the best year for local real estate since 2005.

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Orange County Housing Report: 

Housing Cracks

Even though housing is insanely hot, trends have emerged that confirm that the Orange County housing market is starting to cool.

Cracks Appearing

Trends are developing which demonstrate that the pandemic induced, insane housing run is cooling.

Incredible, relaxing, memory-filled vacations come to an end. Ski seasons come to an end.  The last pages of a good book come to an end. Binge watching a favorite television show comes to an end. Weekends come to an end. Seemingly nothing lasts forever. For the Orange County housing market, the incredible, insanely Hot Seller’s Market will eventually evolve into something completely different, and that is beginning to take place right now.

Now that…

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Orange County Housing Report:

Ch-Ch-Ch-Changes

 

With rates inching their way up to 5%, the housing market is slowly changing and trends are emerging that illustrate a shift in the insanely hot housing market.

New Trends Emerge

As rates zoom upwards, home affordability is beginning to impact the housing market in several profound and meaningful ways.

The scent of orange tree blossoms is captivating. It is just the beginning of the slow metamorphosis from flower to fruit. After the flower blooms, it takes navel oranges seven to 12 months to mature. It is far from instant, but as the petals drop, it reveals a tiny, green fruit that will eventually become a juicy, ripe orange.

Similarly, the evolution of the housing market is far from…

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Orange County Housing Report:  Out of Control

With the number of available homes to purchase at extremely low levels, there simply are too many buyers competing against each other.

 

An Insane Market

When the Expected Market Time drops below 40-days, the Seller’s Market shifts from “hot” to “insane,” and today it is at 20 days.

A three-bedroom, two-bathroom, 1,500 square foot home on a 10,000 square foot lot, built in 1972, was placed on the market on the first Wednesday of February at $999,000. There was a line going down the street to view the home during a three-hour window on Saturday and a three-hour window on Sunday. By Sunday evening there were more than 20 offers submitted to the listing agent. The seller countered to all offers and…

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Orange County Housing Report:  Coming Up… Spring

 

Many mistaken the Summer Market as the busiest time of the year for housing,  yest it is the Spring Market that is home to the most real estate activity year in and year out.

The Spring Market

More homes come on the market during the spring than any other time of the year and demand reaches a peak. 

Spring is just around the corner. The days are growing longer, temperatures are slowly rising, trees that had lost their leaves are blanketed with new buds about to burst to life. Spring officially begins on Saturday, March 20th, and it is also the start to housing’s Spring Market, the busiest time of the year for housing. 

More homes are placed into escrow during the Spring Market than any…

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Orange County Housing Report: Going, Going, GONE!

When a record low number of available homes is matched with fierce pent-up demand, it results in an auction where homes sell immediately and for more than their asking prices.
 
Selling Above the Asking Price

It is common for homes that are just placed onto the market to receive dozens of offers to purchase, pushing up home values at a rapid pace.

For over a century, the predominate way to sell a home in Australia has been by auction. The appeal of an auction is that homeowners believe they can get a higher price by forcing buyers to compete against each other in a bidding war. An auctioneer is hired to conduct the bidding process. The more that participate, the higher the price. It has been…

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