According to Orange County economist, Steven Thomas, there’s definite pent up demand for homes, but just not enough inventory to match. Typically, that is a recipe for appreciation, low supply and high demand, but not in today’s market. Instead, buyers are approaching the housing market much more cautiously. They are very aware that homes have already appreciated considerably since 2012, so they are careful to not overpay. Today’s buyers are seeking the Fair Market Value for a home.
The Orange County housing market has a bad habit of starting the year off with an anemic inventory. This trend dates back to 2013 when almost nothing was on the market, only 3,196 homes. This year’s start is not quite that low, 4,396 homes, but it means that there are still not enough homes to satiate current demand. Today’s inventory is down 12% compared to just one year ago.
With buyers carefully approaching the market, it is extremely important that sellers price their homes as accurately as possible to properly take advantage of today’s lack of inventory. Homes that are priced right will fly off the market. The rest will sit until the price is brought more in alignment with the Fair Market Value. This is precisely why the active inventory will continue to grow from now through August; it will be on the backs of sellers who stretch their value.
Homeowners are foolish if they wait to place their home on the market in anticipation of cashing in on future appreciation. Since homes are not appreciating rapidly, waiting until later in the spring or next year will not be as beneficial as many people think. A great time to get a jump on the competition is actually now while the inventory is extremely low. The only caveat is that the home is priced appropriately.
The active inventory increased by 180 homes, or 4%, in the past two weeks and now sits at 4,576. It will continue to rise through August, but won’t really pick up steam until March. Last year at this time the inventory totaled 5,255 homes, 679 more than today, with an expected market time of 3.29 months, or 99 days, a balanced market that does not favor a buyer or seller. In comparison, today’s expected market time is 2.87 months, or 86 days, an extremely slight seller’s market.
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