Spring Orange County Housing Market Update – Sellers beware, the Spring shift is here
30-year fixed mortgage rate: 3.17%(was 2.65% at the beginning of the year)
Inventory in Orange County dropped by about 1% in the last few weeks
Demand in Orange County increased by about 5% in the last few weeks
Median Sale price in Orange County is up 10% since last year(In all of Southern California it’s up by 15%)
Mortgage applications have dropped for three strait weeks now
Over the next 8 weeks we will typically see the largest increase in inventory on a per week basis that we see all year. When we look at the unhealthy appreciation that has been happening all year(almost 1% per month at this point) as well as the steady increase of interest rates(from 2.65% on Jan 1st to 3.17% today), homes are now becoming more unaffordable, which leads to demand dropping slightly. Future demand, although still very strong, has started to decrease slightly for the last three weeks as reflected by the dip in mortgages applications over that same time period. As some buyers pull themselves out of the market, and more homeowners start placing their homes on the market, the housing will start to trend in a more healthy direction. Although the current market, which is the hottest seller’s market we have been in since at least the 80’s, is great for sellers, it’s unhealthy and unsustainable for much longer. The slight slow down is something I as a real estate agent am rooting for to help get us back to a healthy seller’s market instead of an overheated seller’s market. Yes, you read that right, we will still be in a seller’s market as we enter the Summer months as the supply and demand curves just have too much ground to make up to really get anywhere close to transitioning us to a balanced market anytime soon.
At last! The first good news for buyers all year, inventory should start to increase at a quicker pace for the next two months giving you more options to choose from and reducing some of the pressure. However, sellers will still have the upper hand in this market, multiple offers over asking are still going to be common place so it’s important that you understand this as you continue to search for a home.
At the beginning of the year most economic experts were predicting that interest rates would most likely finish this year somewhere in the 3.1%-3.5% range. I am now seeing many of those experts revising their predictions slightly to somewhere in the 3.4-3.9% range. When you take this into account along with appreciation predicted to continue for the remainder of the year, if you are planning on buying a home this year, the sooner you do so the better you will end up being. Homes will just get more unaffordable from here through the rest of the year. But how are you supposed to compete with so many buyers and what are some strategies you can use to put yourself in the best possible position to get your offer accepted? I’m glad you asked, check out the last two episodes where I spend a total of about 50 minutes going over all of the no, low, and higher risk strategies you have available to you as a buyer to give you the best shot at getting into escrow ASAP.
The shift to the Spring market is here, supply has bottomed out and will start to rise as we head into April and May, future demand also looks to be slowing down slightly as well due to the quickly increasing interest rates and overall affordability of homes. If you are planning on selling your home this year and don’t already have it on the market, you have a few weeks left before the leverage you have as a seller peaks and starts going the other direction. By the end of April we will most likely be in a market that will still heavily favor the seller but will start to trend out of the insane, never before seen, seller’s market, and closer to a normal hot seller’s market.
If you are planning on selling your current home and buying a new one, it’s important to remember that the rising interest rates will also impact you on the back end when you go to buy a home. Selling your home now will give you the maximum amount of leverage and as more homes start hitting the market in the coming weeks, you’ll also have more options available to you as a buyer to find the perfect replacement property to move into. Still scared about buying and selling a home at the same time in this market? Check out the two part series I posted a few weeks back about how to safely buy and sell a home at the same time so you know what protections are available to you to make sure you don’t end up having to scramble to find a new home because your current home sold too fast.