Out of Control

March 23, 2022

WITH THE NUMBER OF AVAILABLE HOMES TO PURCHASE AT EXTREMELY LOW LEVELS, THERE SIMPLY ARE TOO MANY BUYERS COMPETING AGAINST EACH OTHER.

An Insane Market

When the Expected Market Time drops below 40-days, the Seller’s Market shifts from “hot” to “insane,” and today it is at 20 days. 

A three-bedroom, two-bathroom, 1,500 square foot home on a 10,000 square foot lot, built in 1972, was placed on the market on the first Wednesday of February at $999,000. There was a line going down the street to view the home during a three-hour window on Saturday and a three-hour window on Sunday. By Sunday evening there were more than 20 offers submitted to the listing agent. The seller countered to all offers and asked them to come back with their highest and best price. The home closed on during the first week of March at $1,200,000, an astonishing 20% above its list price. 

Not every home sells 20% above its list price. In Orange County, the sales to list price ratio for detached homes so far in March is 103.5%. That means that the average closed sales price was only 3.5% over the asking price. An unbelievable 73.5% of all closed detached homes sold above their list price during the first few weeks of March. The median days on market is 6 days, less than a week. It would probably be even faster, but there are just too many offers to sift through.

The housing market is out of control as home values continue to soar. At this point, it is like a runaway freight train barreling down the tracks at an unimaginable speed. There really is no end in sight due to the catastrophically low inventory. With such a scarcity of homes available, there are far too many buyers for every home that hits the market. This imbalance can be seen in the sheer number of buyers bumping into each other, eager to view the latest new listing that hits the market. 

It is extremely difficult to convey just how devastatingly low the inventory is right now. Today, there are only 1,556 homes available to purchase in all of Orange County. There were 2,349 homes last year, still tragically low, but 51% more than today. The number one complaint last year was that there were not enough homes to purchase, illustrating just how dire the issue has become. The lowest level by far prior to COVID was achieved in 2013 at 3,183 homes. 

That was more than double the current level. The six-year average from 2014 to 2019 for this time of year was 5,432 homes, an additional 3,876, or 249% extra, more than triple. The current inventory level is severely low and the main reason home values are skyrocketing. 

With such a limited supply of homes available to sell coupled with tremendous demand, the Expected Market Time (the time between hammering in the FOR-SALE sign and opening escrow) captures best just how insanely hot the Orange County housing market is today. Anything below 90-days is considered a Seller’s Market. There are different levels of a Seller’s Market: slight, hot, and insane. A Slight Seller’s Market is between 60 and 90 days. Sellers get to call most of the shots, home values are slowly rising, and homes generate between one to two offers. An Expected Market Time between 40 and 60 days is considered a Hot Seller’s Market, where sellers get to call most of the shots, home values are rising, and there are a lot more multiple offer situations, especially in the lower price ranges. Anything below 40-days is an Insane Seller’s Market, and the lower the Expected Market Time, the more housing is out of control and unprecedented. This is when sellers get to call all of the shots, home values are surging, multiple offers are the norm, sales prices typically exceed their asking prices, and homes last only days on the market. At 20 days, the housing market is out of control at every price point. 

Last year’s 23 day Expected Market Time was very similar to today’s ridiculous 20-day mark. In 2013, the Expected Market Time was at 33 days, the only year prior to COVID that reached the white-hot level for housing. The six-year average from 2014 to 2019 for this time of year was 69 days, much different than the current insane pace. With patience, buyers were able to isolate a home within a reasonable amount of time and were not competing against so many buyers writing offers on the same home. 

The simple economic principle of supply and demand does not adequately capture today’s dilemma. There just is nothing available for buyers to purchase right now. Anything that does hit the market is greeted with a deluge of showings and plenty of offers. There really is nothing spectacular about the number of buyers looking to purchase today. That is not the issue. The issue is that there are only 1,556 homes available today in the middle of March, when there are typically around 5,400 (the six-year average between 2014 to 2019). Even with a similar number of buyers searching for a home today compared to past years, there are far fewer choices. This lack of FOR-SALE signs is precisely why the housing market is out of control.

As long as the inventory remains at catastrophically low levels, expect more of the same.  

Active Listings

The current active inventory grew by 11% in the past two weeks.

The active listing inventory increased by 150 homes in the past couple of weeks, up 11%, and now sits at 1,556 homes, its second largest gain of the year, but still the lowest level by far for this time of year since tracking began 19 years ago. Spring has officially arrived. More homes come on the market during spring than any other time of year. These homes will be a welcome relief to buyers sitting on the sidelines eagerly waiting for additional inventory. With mortgage rates remaining at elevated levels with duration, fewer buyers will be willing to stretch as the year progresses, allowing the active inventory to finally climb on the backs of overpriced listings that will accumulate over time. For this to occur, mortgage rates must remain high for months. 

Last year, the inventory was at 2,349, 51% more, or an additional 793 homes. The biggest complaint last year was that there were not enough homes on the market, yet there were more homes available compared to today. The 3-year average prior to COVID (2017 through 2019) is 5,286 , an extra 3,730 homes, or 240% more, nearly three-an-a-half times more than today. There were a lot more choices back then.

For February, there were 2,716 new FOR-SALE signs in Orange County, 416 fewer than the 3-year average from 2017 to 2019, 13% less. Every single missing sign magnifies the inventory crisis.

Demand

Demand continued its upward trajectory, up 4% in the past couple of weeks.

Demand, a snapshot of the number of new escrows over the prior month, increased from 2,195 to 2,284 in the past couple of weeks, adding 89 pending sales, up 4%. The current demand level is still the lowest reading for this time of the year since 2008. It is simply a lack of available homes to purchase and a lack of homes coming on the market. Today’s higher interest rates will start to make an impact on the housing market if they persist for several months. According to Mortgage News Daily, mortgage rates hit 4.55% as of today, March 21st, its highest reading since March 4, 2019. If rates remain elevated, buyers will not be as willing to stretch. Overpriced homes will ultimately sit until they recalibrate their expectations and lower the asking price. This change takes time and will not be noticeable in the data for another couple of months. Expect demand to peak between April and May and then slowly fall for the remaining of the year. 

Last year, demand was at 3,110, 36% more than today, or an extra 826. The 3-year average prior to COVID (2017 to 2019) was at 2,517pending sales, 10% more than today. In Orange County, current demand readings have obviously been muted by a lack of available homes and not enough coming on the market.

With the inventory rising faster than demand, the Expected Market Time (the number of days to sell all Orange County listings at the current buying pace) increased from 19 to 20 days. At 20 days, it is an insane, Hot Seller’s Market (less than 60 days) where there are a ton of showings, sellers get to call the shots during the negotiating process, multiple offers are the norm, and home values are rising rapidly. Last year the Expected Market Time was at 23 days, similar to today. The 3-year average prior to COVID was at 63 days, substantially slower than today and a Slight Seller’s Market (between 60 and 90 days).

Luxury End

Luxury slowed slightly in the past couple of weeks. 

Despite the volatility on Wall Street and the increased geopolitical turmoil, the luxury market remains white hot. In the past couple of weeks, the luxury inventory of homes priced above $2 million increased from 393 to 420 homes, up 7%, or an additional 27 homes. Luxury demand increased by 6 pending sales, up 2%, and now sits at 258. With supply increasing faster than demand, the overall Expected Market Time for luxury homes priced above $2 million increased from 47 to 49 days, still an extremely hot market for luxury.

Year over year, luxury demand is down by 32 pending sales or 11%, and the active luxury listing inventory is down by 285 homes or 40%. Today’s lack of luxury homes available is no different than the lower end. There simply are not enough homes available to match current demand. The Expected Market Time last year was at 73 days, exceptionally hot for luxury, but slower than today, indicating just how unbelievably hot the luxury market is right now. 

For homes priced between $2 million and $4 million, the Expected Market in the past two weeks decreased from 35 to 33 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 48 to 75 days. For homes priced above $8 million, the Expected Market Time increased from 166 to 195 days. At 195 days, a seller would be looking at placing their home into escrow around October 2022.

Orange County Housing Summary 

  • The active listing inventory increased by 150 homes, up 11%, and now totals 1,556 homes, its lowest level for this time of the year since tracking began 19 years ago. In February, there were 13% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 416 fewer. Last year, there were 2,349 homes on the market, 793 additional homes, or 51% more
  • Demand, the number of pending sales over the prior month, increased by 89 pending sales in the past two weeks, up 4%, and now totals 2,284. Last year, there were 3,110 pending sales, 36% more than today. The 3-year average prior to COVID (2017 to 2019) was 2,517, or 10% more.  
  • With the inventory rising faster than demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 19 to 20 days in the past couple of weeks, an insanely Hot Seller’s Market (less than 60 days). It was at 23 days last year, similar to today.   
  • For homes priced below $750,000, the market is a Hot Seller’s Market (less than 60 days) with an Expected Market Time of 15 days. This range represents 21% of the active inventory and 29% of demand.
  • For homes priced between $750,000 and $1 million, the Expected Market Time is 17 days, a Hot Seller’s Market. This range represents 22% of the active inventory and 27% of demand. 
  • For homes priced between $1 million to $1.25 million, the Expected Market Time is 18 days, a Hot Seller’s Market. This range represents 11% of the active inventory and 12% of demand. 
  • For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 18 days, a Hot Seller’s Market. This range represents 9% of the active inventory and 11% of demand. 
  • For homes priced between $1.5 million to $2 million, the Expected Market Time is 20 days, a Hot Seller’s Market. This range represents 10% of the active inventory and 10% of demand. 
  • For homes priced between $2 million and $4 million, the Expected Market in the past two weeks decreased from 35 to 33 days. For homes priced between $4 million and $8 million, the Expected Market Time increased from 48 to 75 days. For homes priced above $8 million, the Expected Market Time increased from 166 to 195 days. 
  • The luxury end, all homes above $2 million, accounts for 27% of the inventory and 12% of demand. 
  • Distressed homes, both short sales and foreclosures combined, made up only 0.1% of all listings and 0.2% of demand. There are only 2 foreclosures and no short sales available to purchase today in all of Orange County, 2 total distressed homes on the active market, unchanged from two weeks ago. Last year there were 11 total distressed homes on the market, similar to today.
  • There were 1,774 closed residential resales in February, 22% less than February 2021’s 2,283 closed sales. February marked a 2% drop compared to January 2022. The sales to list price ratio was 103.7% for all of Orange County. Foreclosures accounted for just 0.2% of all closed sales, and short sales accounted for 0.3%. That means that 99.5% of all sales were good ol’ fashioned sellers with equity.
February Market Report September 30, 2022
263
Listed
76
Avg. DOM
$1,800.03
Avg. $ / Sq.Ft.
$4,495,000
Med. List Price
263 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
243
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.
71
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
230
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...
$47,500,000
Neighborhood: Lido Island (LIDO)
4
Beds
4F21/2
Baths
8,868
Sq.Ft.
2018
Year Built
159
Days on Site
NP22033404
MLS
An immersive sensory experience at every turn. Behold 309 Via Lido Soud, a mesmerizing waterfront retreat peerless in quality, privacy, and scale. Situated on 3.5 lots with approximately 105' of...
$39,950,000
Neighborhood: Other (OTHR)
5
Beds
8F11/2
Baths
12,000
Sq.Ft.
2023
Year Built
158
Days on Site
NP22084117
MLS
No description available...
$35,000,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
6
Beds
7F21/2
Baths
14,809
Sq.Ft.
2022
Year Built
221
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
491
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
19
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...
$28,500,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
6
Beds
6F51/2
Baths
11,494
Sq.Ft.
2022
Year Built
171
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...
$28,000,000
Neighborhood: Cameo Highlands (CAMH)
5
Beds
8F21/2
Baths
12,977
Sq.Ft.
2011
Year Built
22
Days on Site
OC22195056
MLS
Indulge in the pinnacle of costal luxury in this breathtaking ocean and island view estate situated on a massive 1+ acre private lot in Cameo Highlands, the finest real estate address in the entire...
$27,600,000
Neighborhood: Crystal Cove Estate Collection (CCEC)
8
Beds
8F31/2
Baths
13,787
Sq.Ft.
2022
Year Built
171
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...
$26,900,000
Neighborhood: Bayside Drive Custom (BSCH)
5
Beds
7F21/2
Baths
8,278
Sq.Ft.
2022
Year Built
94
Days on Site
NP21180719
MLS
A collaboration between some of the most respected names in coastal luxury home development, this meticulously planned Bayfront estate takes waterfront luxury living to a new level. Situated on...
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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