EVEN WITH MUTED DEMAND DUE TO THE HIGHER MORTGAGE RATE ENVIRONMENT, THE MUTED SUPPLY OF AVAILABLE HOMES HAS ALLOWED THE ORANGE COUNTY HOUSING MARKET TO CONTINUE TO LINE UP SLIGHTLY IN FAVOR OF SELLERS.
A “ NORMAL” MARKET
Everyone seemingly has an opinion when it comes to the housing market. Forget economic models, data, charts, and statistics. Most believe that since values have soared to ridiculous heights and now mortgage rates have skyrocketed to their highest level since 2008, prices must correct. Yet, this kind of logic ignores facts. There is still a huge missing ingredient when it comes to housing, not enough homes. There is an absurd lack of homes available to purchase. Due to a lack of supply, the housing market continues to line up in favor of sellers.
From August of 2020 to June of this year, the market was an INSANE Hot Seller’s Market with an Expected Market Time below 40 days. At those levels, buyers lined up around the block just to see a home. There were very few open houses because homes sold too quickly. “Multiple Offers” was an understatement; instead, homes were procuring 20, 30, or even more offers to purchase. Appraisal contingencies were dropped. Many buyers opted to waive their inspection rights and would ask for no repairs. Sellers were able to rent back their homes for free while they took their time moving out. Homes sold way over their asking prices and home values were rocketing higher. Basically, sellers were able to run the table, call all the shots.
Those days are gone. A Slight Seller’s Market means that a seller must carefully arrive at the asking price, considering the home’s condition, upgrades, amenities, location, and overall appeal. Homes that are nicely appointed, in excellent condition, have that model home feel, and priced according to their Fair Market Value, will still obtain a lot of attention, pull in multiple offers, and, in many cases, sell above the asking price. For everyone else, the further a home is away from being turnkey, in great condition, or in a great location, the longer the home is going to take to sell. Sellers need to pack their patience. The market is no longer instant. As a result, more and more homes are sitting on the market.
The market has undeniably evolved from warp speed, out of control, to a much more normal pace. However, nobody is used to normal. It is when buyers and sellers must negotiate a contract prior to opening escrow. Sellers do not call all the shots. There is no more waiving the appraisal or inspections. Sellers do not have the opportunity to rent their homes back from buyers after the closing for FREE. For the most part, homes are not selling over their asking prices. The froth of the past two years is gone. It is a Slight Seller’s Market.