February Orange County Housing Market Update
Since the beginning of this year, inventory continues to decline as buyers are snatching up homes faster than they are hitting the market. Over the last few weeks there has been a 5% drop in homes for sale while demand has picked up by a whopping 26% in Orange County. Interest rates are up slightly from the beginning of year (2.73% vs 2.65%) and are projected to continue to slowly rise as more people are vaccinated and the economy improves.
Buyers: I’m not going to sugar coat it, right now this is one of the hardest times in recent memory to purchase a home. Inventory is currently 61% lower than last year at this time and demand is now back on the rise again now that the holidays and Super Bowl are over. You might feel like it’s not even worth it to try and get into a home right now with how crazy everything is, however, if you are thinking of buying a home this year, this is not the best strategy. Appreciation is happing daily in the market and interest rates are still on the rise. The longer you wait to get into escrow the less you will be able to afford and the higher your monthly mortgage payments will be. Now more than ever, it’s extremely important that you work with an agent and lender than can give you the right advise to make sure you are placing competitive and creative offers but at the same time not getting yourself into a deal that you will later regret.
Sellers: Get. Your. Home. On. The. Market. Now! In all price ranges, including those above 1.5 million, sellers haven’t seen a market like this in over 16 years. You are in the drivers seat when it comes to the terms you agree to when going into escrow with a buyer. I will say this every month because it’s so important, and the #1 reason your home won’t sell, make sure you don’t get unrealistic when pricing your home out of the gate. Because buyers have been in the markets longer than usual, they are more aware of what homes should be going for in your market and if you over price your home they won’t take your listing seriously. If you over price and have to reduce it later, statistically you will get less interest and lower offers. In almost all cases, your best bet to receive the highest offer is to still price your home within the high end of market value and let the multiple offers you get help drive up the price even higher.
Looking forward:
As we move into March the typically cycle of more homes hitting the market will start to heat up especially as vaccines become more widely available and homeowners start to feel more comfortable having other people in their homes. More homes will be a welcome relief for buyers but by no means will take us out of a hot seller’s market. There is just too much inventory to make up based on where we are now to really impact the market significantly but as the months go on, the combination of interest rates rising, appreciation happing, and more homes hitting the market will slow demand slightly while supply increases.
