There is a scarcity of homes for sale. Multiple offers are the norm. It is not uncommon to hear that 15 offers are generated on a home that just hit the market. When this occurs, a bidding war ensues. It is as if a mini auction occurs. The highest and best offer wins and 14 buyers must go back to the drawing board and continue their search for a home. More buyers are desirous of homes than the number of homes available. As a result, home values have been on the rise since June. That is when the Expected Market Time (the time between pounding in the FOR-SALE sign to opening escrow) first dropped below 60-day threshold, a Hot Seller’s Market.
The Expected Market Time is the speed of the market. The lower the Expected Market Time, the faster the market. It takes into consideration both the current inventory of homes available to purchase and buyers demand to pull the trigger and buy a home (the last 30-days of pending sales). Today, it sits at 40 days, far below the 60-day threshold that indicates a Hot Seller’s Market, a market where sellers get to call the shots and values are on the rise.
It was a Slight Seller’s Market, between 60 and 90 days, last year, that is when sellers still get to call more of the shots, but there are fewer multiple offers, it takes longer to sell, and values are not changing much at all. There were 54% more homes available and demand was down by 29% compared to today. When there is more supply and less demand, the rate of appreciation drops considerably.
Click on the image below the Read the Orange County Housing Report.