November 22 Market Update

Market Report Newsletter
logo.png
Blue_Tropical_Summer_Sale_Announcement_Facebook_Shops_Ad_(4).pngCopy_of_Blue_and_Yellow_Modern_Artisan_Parties_and_Celebrations_X-Frame_Banner.png

Holiday Market

During the Holiday Market both the inventory and demand will plunge until ringing in a New Year. 

Southern California does not get pummeled by snow during the holidays like the rest of the country. There are no blizzards, school days are not cancelled due to snow, freezing temperatures are rare, and roads are drivable year-round not taking into account construction cones and the grind of holiday traffic. Regardless of the weather, housing slows with all the distractions of the yuletide season. The holidays are here and with it come holiday parties, plenty of shopping, family gatherings, eggnog, spirits, and nonstop festive music. With COVID being much less of a distraction and a deterrent to enjoying the essence of the season, sellers and buyers are going to be even more inclined to place their real estate needs on pause.

The Holiday Market is when the inventory plunges, demand plunges, and the Expected Market Time increases slightly. Regardless of the economic situation, without fail the cyclical slowdown prevails. Last year the number of available homes was already at historically low levels all year. After peaking in July, a record low peak, it was hard to imagine the inventory could plunge at the end of the year. Yet, from mid-November to the start of the New Year, it sank by 39%. Demand, a snapshot of the number of new escrows over the prior month, dropped by 44%, and the Expected Market Time, the time between coming on the market and opening escrow, increased by a meager two days. Similarly, the 3-year average inventory holiday drop prior to COVID (2017 to 2019), when housing was a bit more normal, was a 20% decline. Demand dove by 44% and the Expected Market Time increased by an additional 19 days.

Copy_of_Blue_and_Yellow_Modern_Artisan_Parties_and_Celebrations_X-Frame_Banner_(6).png

The inventory seasonally drops because not many homeowners come on the market at the end of the year. The fewest number of sellers enter the fray in December, 64% less than May, the peak month with the greatest number of new sellers. The second fewest come on in November, 46% less than May’s peak. In addition, many sellers who have not found success, mainly due to price, opt to throw in the towel and pull their homes off the market. The combination of those two forces, fewer new FOR-SALE signs and unsuccessful sellers, cause the inventory to plummet until the start of the New Year.

Demand, recent escrow activity, drops substantially as well. Many buyers who have been actively looking for a home wait on the sidelines for the right home to come along. Yet, with fewer new choices as the end of the year draws closer and many sellers throwing in the towel, there is a real lack of fresh inventory, no replenishment of available homes. Moreover, there are buyers who are simply ready to pause the home search process and divert their attention to enjoying all the trimmings of the holidays. For many, it simply is not the time to hunker down and tiresomely search for a home.

This year will not be an exception and the holiday pause has already arrived. In just the past two weeks alone the inventory has dropped by 8%, shedding 295 homes, the second largest drop of the year. There are only 3,286 available homes today, the second lowest end of November level behind last year. Demand increased, adding 10 pending sales, but it too is about to drop as fewer choices remain. The Expected Market Time dropped from 89 to 81 days, a bit better for the sellers who have opted to linger on the market during the holidays. It is still a far cry from the crazy market during the first four months of 2022 when the Expected Market Time reached a low of 19 days in March.

The holidays are here for the Orange County housing market. The housing needs of many will be placed on pause to enjoy all that this season brings. As a result, expect inventory and demand to plunge and market times to grow a little bit longer as housing moves through its slowest season of the year.

Demand increased by 1% in the past couple of weeks.

Demand, a snapshot of the number of new escrows over the prior month, increased from 1,202 to 1,212 in the past couple of weeks, adding 10 pending sales, or up 1%. It was the first rise since mid-August. According to Mortgage News Daily, after remaining well above 7% for over a month, mortgage rates have dropped and have been hanging around 6.65% for nearly three weeks, providing a bit of relief to buyers looking to purchase. This has sustained demand at its current muted levels and prevented it from dropping further. Ultimately, with the number of choices dropping with fewer homes coming on the market for the rest of the year, expect demand to follow its normal seasonal drop until shaking of the holiday lull after the first couple of weeks of the New Year. From there, expect demand to rise.

Last year, demand was at 2,221, 83% more than today, or an extra 1,009. The 3-year average prior to COVID (2017 to 2019) was at 1,969 pending sales, 62% more than today, or an extra 757.With supply falling and demand rising, the Expected Market Time (the number of days to sell all Orange County listings at the current buying pace) decreased from 89 to 81 days in the past couple of weeks, its lowest level since mid-October. Last year the Expected Market Time was at 20 days, substantially faster than today and home values were screaming higher. The 3-year average prior to COVID was 85 days, similar to today. 

Copy_of_Blue_and_Yellow_Modern_Artisan_Parties_and_Celebrations_X-Frame_Banner_(7).png

Luxury End

The luxury housing market cooled considerably in the past couple of weeks. 

In the past couple of weeks, the luxury inventory of homes priced above $2 million decreased from 775 to 730 homes, down 45 homes, or 6%. Luxury demand decreased by 25 pending sales, down 19%, and now sits at 110, its lowest reading since May 2020, the initial lockdowns of COVID. With demand dropping significantly faster than the drop in supply, the overall Expected Market Time for luxury homes priced above $2 million increased from 172 to 199 days, its highest reading since June 2020. For perspective, it was 45 days in February, extremely hot compared to the sluggishness of luxury today. 

 

Year over year, luxury demand is down by 111 pending sales or 50%, and the active luxury listing inventory is up by 308 homes or 73%. The Expected Market Time last year was 57 days, nearly instantaneous for luxury. 

For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 137 to 144 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 365 to 527 days. For homes priced above $8 million, the Expected Market Time increased from 220 to 420 days. At 420 days, a seller would be looking at placing their home into escrow around January 2024. 

Carter Weir
Sales Agent
| lic #: 
01455381
office: 
949.566.1136
mobile: 
949.795.2222
website: 
weirproperties.com

3301  East Coast Hwy, Corona Del Mar 92625

Unsubscribe or Manage Preferences

©2022 Berkshire Hathaway HomeServices California Properties (BHHSCP) is a member of the franchise system of BHH Affiliates LLC. Properties may or may not be listed by the office/agent presenting this information. Based on information obtained from the MLS as of (include the date data was obtained). Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS. BHH Affiliates LLC and BHHSCP do not guarantee accuracy of all data including measurements, conditions, and features of property. Buyer is advised to independently verify the accuracy of that information.

4 Properties
$7,000,000
Neighborhood: Harbor View Homes (HVHM)
5
Beds
5F11/2
Baths
4,337
Sq.Ft.
1969
Year Built
4
Days on Site
NP23016819
MLS
Located in the Prestigious Port Street Community of Newport Beach, this architectural masterpiece was built in 2021 with attention to upscale design and unsurpassed detail. This newly built Smart...
$5,499,000
Neighborhood: Harbor View Homes (HVHM)
5
Beds
5F11/2
Baths
3,911
Sq.Ft.
2022
Year Built
75
Days on Site
OC22245135
MLS
Welcome to this stunning custom-built, "Inner Loop" home in the premier Harbor View Homes, also known as the Port Street Community in Newport Beach. Designed by architect Mark Teale and built by...
$4,795,000
Neighborhood: Harbor View Homes (HVHM)
5
Beds
5F11/2
Baths
3,688
Sq.Ft.
2003
Year Built
25
Days on Site
NP22242405
MLS
Ideally located on an inner-loop street just steps from the greenbelt, this beautiful custom Port Street home offers 5 bedrooms + office (or 6th bedroom) and 5 1/2 bathrooms. Upon entering the home...
$4,695,000
Neighborhood: Harbor View Homes (HVHM)
4
Beds
4F11/2
Baths
4,241
Sq.Ft.
1994
Year Built
80
Days on Site
NP22241789
MLS
Welcome to 1824 Port Margate, a timeless 4 bedroom, 4.5 bathroom home located in Phase 1 of the Port Streets. As you enter this beautiful, traditional style home, a foyer with grand ceilings awaits....

Post a Comment