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Orange County Housing Report:

Opportunity Knocks NOW!

July 11, 2022

For homeowners looking to sell in 2022, the window of opportunity is closing as the inventory climbs, demand falls, and market times grow longer.The longer homeowners wait, the harder it will be to sell

The Orange County housing market already cooled substantially, and it will only continue from here.

Every time the housing market transitions away from a Hot Seller’s Market, too many homeowners fall victim to waiting to sell. They do not understand the magnitude of the current market shift and how quickly the market has evolved so far in 2022, and where it is going from here. Many will be kicking themselves as they learn the hard way what it is like to sell in a much slower market during the second half of this year. It will be a case of “you snooze you lose,” as many sellers will have an extremely hard time finding success. 

The best time of the year to sell a home is during the Spring Market, from mid-March to the end of May. That is when the most escrow activity takes place, demand peaks, and the inventory climbs. From their housing transitions to the Summer Market, the second-best time of the year to sell, from the end of May when the kids get out of school through mid-August when they all return to the classroom. With all the distractions of summer, from family vacations to hitting the beach, demand diminishes, and the inventory continues to climb. 

People buy and sell houses year-round, but families prefer to look for a home and write offers to purchase during the spring. They can then open escrow and close at the very end of spring or during the summer months while the kids are on break. If they want to close prior to school starting next month, they need to enter escrow by the end of July or risk closing and moving after the kids have already started. This can be very disruptive, which is why there is a definitive seasonality to the housing market.

Just around the corner is the Autumn Market, from the end of August through Thanksgiving. That is when demand continues to fall and, typically, so does the inventory. Not this year. In a transitionary year due to higher rates, demand will drop while the inventory will consistently climb until peaking between October and Thanksgiving. The inventory normally peaks between July and August. With the inventory climbing and demand falling, the market will methodically slow for the remainder of the year. This can be seen by taking a closer look at how quickly the Expected Market Time (the amount of 

time between hammering in the FOR-SALE sign and opening escrow) has evolved so far this year. In Orange County, it started the year at 25 days, an insanely Hot Seller’s Market when there was nothing on the market and truckloads of buyers were writing offers to purchase. Values were skyrocketing and homes were only lasting days before opening escrow. It hit a record low of 19 days at the start of March. 

While homes were flying off the market at an unprecedented pace and buyers paid aggressively over the asking prices, mortgage rates rapidly climbed in the background. They were at 3.25% at the start of the year, grew to 4.25% in March when the Orange County market was at its hottest point, and continued to grow until it hit 6.28% in June after a hotter than expected read on inflation, the Consumer Price Index (CPI). It has receded to 5.77% today, according to Mortgage News Daily, still at heights last seen in 2008. The higher interest rate environment has taken an enormous bite out of home-affordability, which is why demand (a snapshot of new escrow activity over the prior month) is at its lowest level for this time of year since tracking began in 2004 and is down 61% compared to last year. As a result of diminished demand, the inventory has climbed from 1,100 home at the start of the year to 3,803 today, up 50% compared to last year. Keep in mind that the overall inventory is still down substantially compared to where it was prior to COVID. The 3-year average inventory from 2017 to 2019 was 6,708 homes, 76% higher than today’s level. Muted demand is currently matched with a muted supply. 

This is what homeowners need to understand: the inventory will unrelentingly rise from now until it peaks during the Autumn Market, demand will methodically drop for the remainder of the year, and the market time will grow longer and longer. At today’s 67-day level, it is a Slight Seller’s Market (between 60 and 90 days) where sellers get to call more of the shots, but there are fewer multiple offers and home values are not appreciating as fast as they have been over the past couple of years. The market is no longer instant and properly pricing is absolutely crucial to find success.

The Expected Market Time will grow from 67-days to over 90-days within the next couple of months, and the Orange County housing market will transition to a Balanced Market (between 90 to 120 days), one that does not favor sellers or buyers and home values are no longer climbing. Depending upon where mortgage rates are during the autumn, housing could even reach a Slight Buyer’s Market (between 120 and 150 days), where buyers get to call the shots, yet home values are still not changing much. If a Slight Buyer’s Market persists with duration, for more than four months, prices could start to slowly decline. Any declines would be small as there is a real stickiness to home values due to the strength of the housing stock. There will be very little seller desperation.

The bottom line for homeowners thinking about selling: The longer they wait, the slower and more challenging the market will be. Right now, the market is still strong. Sellers will achieve success IF they price their homes according to their Fair Market Value. Opportunity is knocking.

Active Listings

The current active inventory continued to rocket higher.

The active listing inventory surged in the past couple of weeks, adding 312 homes, up 9%, and now sits at 3,803, its highest level since November 2020. With persistently higher rates, demand has significantly dropped to low levels last seen during the Great Recession, which has allowed the supply of homes to rapidly rise. The current level of available homes to purchase is still way down compared to where it was prior to COVID. Yet, as the year progresses, expect the inventory to relentlessly rise and make up the difference. Normal levels of homes available will be a welcome relief to the record low anemic inventory of the past couple of years. 

Last year, the inventory was at 2,528, 34% lower, or 1,275 fewer

The new trend that developed this year is a sharp decrease in the number of homes coming on the market. For the month of June, there were 3,443 new FOR-SALE signs in Orange County, 418 fewer than the 3-year average prior to COVID (2017 to 2019), 11% less. So far in 2022, there have been 3,632 missing signs, down 16%. These missing signs counter the potential rise in the inventory.

Demand

Demand plunged by 8% in the past couple of weeks.

Demand, a snapshot of the number of new escrows over the prior month, plunged from 1,861 to 1,710 in the past couple of weeks, down 8%, and its lowest level since May 2020 during the lockdowns of the pandemic. It is at its lowest level for July since tracking began in 2004. The large drops in demand should subside now that the market has digested June’s spike in rates. Expect demand to continue to slowly drop through the Summer and Autumn Markets.

Last year, demand was at 2,761, 61% more than today, or an extra 1,051. The 3-year average prior to COVID (2017 to 2019) was at 2,582 pending sales, 51% more than today, or an extra 872.

Luxury End

The luxury housing market in Orange County is downshifting rapidly. 

In the past couple of weeks, the luxury inventory of homes priced above $2 million increased from 776 to 823 homes, up 6%, or an additional 47 homes, its highest level since December of 2020. Luxury demand decreased by 15 pending sales, down 7%, and now sits at 196, its lowest level since January. With the supply rising and demand falling, the overall Expected Market Time for luxury homes priced above $2 million increased from 110 to 126 days, still excellent for luxury, but rapidly slowing and its highest level since January 2021. It was at 45 days in February, an insanely HOT Seller’s Market. The volatility of Wall Street has significantly impacted the luxury housing market.

Year over year, luxury demand is down by 34 pending sales or 15%, and the active luxury listing inventory is up by 200 homes or 32%. The Expected Market Time last year was at 81 days, considerably stronger than today. 

For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 88 to 98 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 143 to 159 days. For homes priced above $8 million, the Expected Market Time increased from 353 to 625 days. At 625 days, a seller would be looking at placing their home into escrow around March 2024.

February Market Report December 7, 2022
260
Listed
85
Avg. DOM
$1,799.43
Avg. $ / Sq.Ft.
$4,324,000
Med. List Price
260 Properties
Page 1 of 22
$69,800,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
7
Beds
13
Baths
15,500
Sq.Ft.
2021
Year Built
311
Days on Site
NP21118313
MLS
Commandingly perched atop one of Southern California's most desirable parcels of land, this custom designed crown jewel securely nestled at the pinnacle of Crystal Cove offers unobstructed views of...
6
Beds
8F21/2
Baths
14,500
Sq.Ft.
139
Days on Site
22180937
MLS
This custom new build, on the front row in Crystal Cove's ultra exclusive and highly secure second gated community showcases sweeping unobstructed ocean views, superior construction, and meticulous...
$59,800,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
7
Beds
10F21/2
Baths
15,000
Sq.Ft.
2014
Year Built
298
Days on Site
NP21124827
MLS
Located within the custom gates of Newport Coast's premiere private community, Crystal Cove this estate offers timeless elegance and seclusion nestled on one of the largest custom parcels showcasing...
$39,950,000
Neighborhood: Other (OTHR)
5
Beds
8F11/2
Baths
12,000
Sq.Ft.
2023
Year Built
226
Days on Site
NP22084117
MLS
No description available...
$35,995,000
Neighborhood: Balboa Peninsula Point (BLPP)
4
Beds
3F11/2
Baths
3,725
Sq.Ft.
2022
Year Built
61
Days on Site
NP22203218
MLS
Discover an intimate living experience in harmony with the sand and sea at The Wedge House: a brand-new (2022) decadent-masterpiece flawlessly designed as an entertainer's paradise. Set on two...
$35,000,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
6
Beds
7F21/2
Baths
14,809
Sq.Ft.
2022
Year Built
289
Days on Site
OC21023166
MLS
Crystal Cove's newest custom home is a masterfully-designed hilltop estate prominently positioned on a private front-row lot behind the community's prestigious second gates. Stunning architecture is...
$31,000,000
Neighborhood: Linda Isle (LIND)
4
Beds
4F11/2
Baths
5,500
Sq.Ft.
2020
Year Built
559
Days on Site
NP21115600
MLS
Just completed, this bay front home occupies the most sought-after location on Newport Harbor. Set behind the manned gates of Linda Isle, this 5,500 square foot residence of contemporary design is...
$29,995,000
Neighborhood: Bayside Drive Custom (BSCH)
5
Beds
2F53/421/2
Baths
9,129
Sq.Ft.
2022
Year Built
87
Days on Site
NP22164402
MLS
Destined to enrich your life, this brand-new custom estate is a spectacle of waterfront living in Corona del Mar. An impressive team from the rarified world of bespoke residences united to create the...
Open 12/8
1 Island Vista Newport Coast, CA 92657
$28,850,000
Neighborhood: Pelican Crest (NCPC)
5
Beds
7F11/2
Baths
11,183
Sq.Ft.
1999
Year Built
1
Day on Site
OC22252311
MLS
Rarely offered but highly sought after, 1 Island Vista is a newly reimagined and reconstructed estate in the ultra exclusive community of Pelican Crest. Championed on an oversized corner lot to...
$28,500,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
6
Beds
6F51/2
Baths
11,494
Sq.Ft.
2022
Year Built
239
Days on Site
OC21011374
MLS
Perched above the highly coveted community of Crystal Cove, the exclusive custom home lots of Crystal Cove is the epitome of luxury and exclusivity. Behind a second set of gates, all custom home...
Open 12/10
22 Deep Sea Newport Coast, CA 92657
$27,900,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
6
Beds
7F21/2
Baths
12,234
Sq.Ft.
2007
Year Built
31
Days on Site
OC22206207
MLS
An enchanting estate fully reimagined inside and out behind the guarded gates of The Customs in Crystal Cove.
Reminiscent of an Italian villa, the designer furnished 6 bedroom residence is...
$27,600,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
8
Beds
8F31/2
Baths
13,787
Sq.Ft.
2022
Year Built
239
Days on Site
OC21011334
MLS
Amazing custom build to suit opportunity in one of the most exclusive enclaves in Crystal Cove. Perched atop the ultra prestigious Crystal Cove Community in Newport Beach, 6 Waves End is one of the...
Happy Client
“We would like to thank Weir Properties for doing such an outstanding job in both the sale of our Newport Coast home and the purchase of our Corona del Mar home. Both transactions went flawlessly and we were extremely satisfied with how quickly and seamlessly both transactions occured. Your entire team was a pleasure to work with and we will highly recommened you to anyone in the future. “
Eric and Adrianna Olsen
“The Weir Team represented me in bothe the sale of my previous home in Harbor View Homes area of Newport Beach and the purchase of my present home in Irvine Cove in Laguna Beach. They were wonderful! Based on my experience, I would not buy or sell a property through any-one other than the Weir Team
John and Sue Murphy
“My husband and I were lucky enough to land not only fantastic agents but also true friends. The Weir Team made our buying experience the best that it could be. We started looking for homes in January of 2013. After 7 offers and who knows how many previews we found our dream home in October 2013. The Weir Team was patient, informative and honest. They had the answers to all of our questions and gave us the guidance when we needed it most. They made sure we kept our heads up when we weren’t sure we could handle another let down and kept searching for our perfect home. There is no doubt in my mind that down the road when the time comes, The Weir Team will be our go to.”
Christine and Eric Ferentz
“I recently closed on a new property in Corona Del Mar.  I had some very specific criterion for my new home.  We had been looking for more than a year.  The Weir Team patiently worked with me showing me only properties than would interest me.I am very pleased to have found my new home with their help.  The property I purchased is a modern design and truly unique.  The Weir Team made certain that didn’t miss out on the op-portunity.  She made the entire transaction process a pleasant experience, easily the best that I have ever had in real estate.”
CJ Rolfs
Prior to the transaction described below, I had not worked with The Weir Team. However, for many years I had heard of them and that they were excellent real estate brokers in the area. Several years ago one of my clients was the trustee of her deceased mother’s trust. My client had retained the Weir Team to handle the rental of the trust’s real property in Corona del Mar. The rental arrangements continued for approximately ten years. My client was very pleased with the service she recieved from the Weir Team as their leasing agents.The real property was ultimately sold. The Weir Team was the selling broker, representing my client. I participated in the sales activities and negotiations, including drafting my own forms of Listing Agreement and Sales Agreement, and reviewing and advising with respect to offers. Both my client and I were pleased with the services and results obtained. Since the transaction I have from time to time consulted  with the Weir Team on other real estate matters. They have always been cooperative, willing to go out of their way to provide service, and very helpful.I am pleased to recommend The Weir Team as being reputable and first class real esate brokers in our area. 
Peter C Bradford _ Attorney at Law
I recently sold my house in Newport Coast and purchased a house in Newport Beach using The Weir Team as our realtors for both transactions.  They could not have done a better job with both deals and I would highly recommend them for anyone in need of a residential realtor.  They excelled in both transactions.  On the sale side, they were very professional, created an excellent brochure and were constantly available for showings and questions.  Ultimately, we sold our house in a timely manner for the highest price ever in the neighborhood.  On the purchase side, The Weir Team was extremely well-connected, knew Newport Beach and the surrounding areas extremely well and was willing to show us endless houses as we tried to turn over every stone looking for a dream house.  At the end of this process, we were able to buy the perfect house that never even made it to a “pocket listing” because of his connections.    It is impossible to express in this short letter how valuable The Weir Team was during this very important and personal process of selling and buying a house.  They are incredible realtors and even better people and I cannot recommend them highly enough if you are thinking of buying or selling a house.  
Brian Murphy _ President Athletes First

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