The OC Register this week garnished the front page with a giant “O.C. Housing Market Red-Hot” headline. I think this columnist is late to the party, or maybe I don’t understand her definition. In the last 45 days or so since the interest rates increased over one point the market has “cooled” substantially.
“Robust supply of homes leads to 42% sales increase.” For the last year the supply has been extremely low as well as interest rates. This has led to multiple offers and increasing median prices that were referred to. Those in the trenches realize that it was the low interest rates and more importantly the loss of the supply of “distressed listings” that has created the increase number of sales.
Robust supply is now becoming more of a reality and we are headed to a more normal market because of two things. The interest rate increase means the borrowers can only qualify for 90% of the house that they could qualify for two months ago. In addition many sellers have come late to the party and have built into their pricing additional increases which are NOT now occurring due to the interest rate hike. Many homeowners that have been underwater or who bought at the peak of the market are hoping that they can now sell at previous peak prices which may not happen. Many listings are now coming on the market at unreasonable prices.
My observation is that we have recovered to 70% to 90% of peak pricing (depending on neighborhood and price range) but we are not completely back to those peak numbers. I have also observed that many well qualified buyers that were unable to buy or compete with the cash buyers this spring are now somewhat disgruntled and are in a wait and see mode. Some are starting to put in lowball offers which now creates the buyer/seller standoff.
If you want to know what happened 30 to 60 days ago in real estate read the paper. If you want the pulse of the Laguna Niguel market talk to a Realtor.