It is that time of the year. There are Halloween costumes at Costco. The kids are back in school, online for now. Mornings are a lot darker with the sun rising later. The official start to autumn is not until Tuesday, September 22, but signs are beginning to emerge that the seasons are about to change.
As for Orange County housing, the Autumn Market typically starts at the end of August when the kids head back to school. With the Spring and Summer Markets in the rearview mirror, many families back off their pursuit in purchasing a home. Similarly, fewer homeowners enter the fray and many unsuccessful sellers pull their homes off the market. With the kids back in school, the timing just is not the best for families. Moving can be disruptive while the kids are focusing on their education.
Yet, 2020 has been nothing close to ordinary or typical. What should have been the Spring Market, March through May, turned into one of the slowest springs in memory. The “Stay at Home” order and initial shock and anxiety of the Coronavirus kept buyers from buying and homeowners from selling. As the real estate industry adapted becoming an essential service, and the shock of the virus that included social distancing, sanitizing, and dawning a mask waned, housing surged. The Summer Market became the Spring Market in 2020. It appears as if the Autumn Market is going to be the Summer Market in 2020, not quite as hot as June, July, and August, but still quite busy with homes flying off the market and generating multiple offers. All signs point to an extraordinary September, October, and first half of November.
Supply and Demand: The active listing inventory is at its lowest August level since tracking began in 2004, and current demand is at its highest level since 2012. Year over year, the active inventory is down by 41% and demand (the number of pending sales over the prior month) is up by 30%. In taking a deeper look, the hottest price ranges are between $500,000 and $1 million. From $500,000 to $750,000, there are 927 fewer FOR-SALE signs compared to last year, 54% less, yet demand is up by 120, 13% more. Between $750,000 and $1 million, there are 606 fewer active listings, 54% less, and demand is up by 291, 52% higher. These ranges have an Expected Market Time (the time between pounding in the FOR-SALE sign to opening escrow) that is less than 30-days, CRAZY HOT. The upper ranges are experiencing a diminished supply and extraordinarily strong demand. The only demand reading that is off is for properties priced below $500,000, with 7 fewer pending sales year over year, 1% less, yet there are 371 fewer active listings, down by 35%.
For Orange County, the low supply and feverish demand has paved the way for an overall Expected Market Time of 39 days, its lowest level of the year and the best reading since 2013. Anything below 60-days is considered a Hot Seller’s Market with tons of showing, multiple offers, and strong sales prices. Typically, the lowest point of the year occurs between March and April. For it to occur at the end of August is indicative of a strong Autumn Market to come. Any changes in the inventory and demand are customarily a slow evolution.
Reports on housing: Stephen Thomas