Spring 2018 – Low Market Inventory is Not a Scam
I am often asked “How is the market?” The answer for now is “It’s a seller’s market.” This is because there is only a one to two month supply of homes for buyers to buy. In some lower price ranges there may only be a week or two of supply with anything coming on the market being snapped up. That being said the higher the price the longer the marke time. Why has the seller’s market continued so long and why is the inventory of homes so low? There are several reasons but the largest is that baby boomers are NOT moving. See below what economist and market watcher Steven Thomas has to say.
“Through surveys and in-depth studies, experts and statisticians have figured out many of the reasons there are not enough homes for sale. The biggest contributing factor is that baby boomers are staying put. They are not moving like many had originally anticipated. They have been slower than prior generations to sell the family home. Perhaps it is because baby boomers are living longer and are living a healthier lifestyle. The need to sell the family home is not as daunting right now, so they are happy to just age in place.
During the Great Recession and the recovery, millions of investors have converted family homes into rentals. With rising home values coupled with rising rents, holding onto these homes has proved to be a wise long-term investment. There is no incentive for them to sell anytime soon.
In addition, homeowners have cashed in on lower mortgage rates through purchase and refinance loans. Many are locked into 30-year fixed rates well below 4%. As interest rates rise, homeowners will elect to stay put and continue to enjoy their lower interest rates.
Finally, new homebuilders are ignoring the entry-level buyer. Builders used to cater to the entry-level buyer and the luxury end was the exception. Today, it is the other way around. Seemingly, everything is now tilting towards the luxury buyer. Without new affordable housing, the residential resale entry level has been squeezed. As a result, the lower end resale market has been on fire for years now and has appreciated dramatically, propping up the rest of the market.
Buyers in today’s market need to understand that the lack of supply is not a trend; it is the new norm. To be successful, buyers must realistically approach the market with a solid game plan, a game plan that includes patience, a very sharp pencil, and the ability to proceed quickly.”
Summer 2018 – Change is in the wind !!
Change is in the wind. Interest rates are climbing. Two more interest rates increases are planned for fall of 2018. Inventory for Orange County has now surpassed that of 2017 at this same time by 800 homes and some sellers are still pricing their homes well over the last comps for the neighborhood. August is slower every year but this year the rates are 1/2 to 3/4 higher than last year. The extreme seller’s market for homes under one million has now cooled to a “slight seller’s market” and by fall it will be more of a BALANCED MARKET. Homes between a million and 1.5 million are still selling well with a market time of about 100 days. Homes over two million have a market time of 185 days and are experiencing a “Buyers Market”.
Does this mean that prices will plummet??? What do you think?
Housing Inventory for Orange County started the year at about 3800 homes (six year low) . Buyer demand will stay strong as long as the interest rates stay low. We are expecting further modest increase in mortgage interest rates this year. If the economy continues to improve and the increase is slow most people believe it will not impact prices in 2018. Stand by for more. For a FREE HOME VALUE evaluation call Ron today at 949-456-0505 or Click Here.
Short Sales and Bank Owned properties make up about 1 percent of the Orange County Housing Market.
For the latest OC HOUSING REPORT BY STEVEN THOMAS, Call or text Ron Buck at 949-456-0505 or email Ron@RonBuckGroup.com