Key Data from the last 30-days in the housing market
Demand has dropped by 4% in the last 30 days. Not very noticeable, still a very hot seller’s market even though demand is going down. One of the reasons demand(pending sales) is down is there is just isn’t enough inventory for buyers to choose from so it is slightly skewing the numbers
Supply has remained unchanged. Active inventory started August around 2,500 homes and ended August around 2,500 homes. For reference, last year we had more than 4,300 homes on the market at the end of August.
Interest rates are up, slightly. Interest rates started the month at 2.77% and have gone up to 2.87% as of today. Still some of the lowest rates we have ever seen for a mortgage.
The average time on market increased from 27 to 28 days in OC. Anything under 60 days is a hot seller’s market, so we are still in an extremely hot seller’s market.
So what does the next three months have in store for the housing market?
Expect much of the same. Inventory as well as demand will both decline slowly and at similar rates as we head deeper into Fall until we get to the second and third week of November when you will see a more dramatic decline in both as we start the traditional shift into the slowest time of year for real estate as people get ready for Thanksgiving and the rest of the holiday season.
Interest rates will most likely continue their slow and steady increase as each month goes by, but I don’t expect them to get much above 3.2% at the highest by the end of the year which will keep demand at a pretty consistent level. Appreciation will slow as the year gets closer to coming to a close which will bring buyers some welcomed relief from the crazy appreciation we have seen over the last 12 months.
Forbearance and Eviction Updates
The eviction moratorium will lift in CA at the end of this month. Almost half of the home owners that have been in forbearance will be existing forbearance in the next 60 days(about 750,000 home owners). Will this bring a flood of homes to the market?
The data has shown that less than 20% of the the home owner in forbearance, currently about 1.6 million households, are actually in any real danger of losing their homes due to many factors(please see last months market update if you want the detailed explanation) or CLICK HERE
Although the state did a very poor job rolling out rental assistance to tenants that have been missing payments, they have made some much needed progress over the last 30 days in getting tenants money to cover 100% of their missed rent and utility payments going back to as early as April 2020. There is still a lot of work to be done so if you or someone you know has missed either rent or utility payments, please go to the state’s Rent relief website www.housingiskey.com to start applying for part of the billions of dollars that are still left in the CA fund to help get you caught back up and current with all of your payments.
One last note on evictions and foreclosures, for those that do need to go through one of these and are forced to sell or leave their current home, the legal process to do so often takes months to actually finish which means that you will not really see much of an impact on the housing market in 2021. The majority of these won’t impact the market until 2022 and because we are very likely to start next year with the lowest inventory ever to start out the year in the housing market. Interest rates don’t look like they will be increasing significantly anytime soon, so the homes that do eventually hit the market will most likely be quickly absorbed by the large amount of buyers looking to get into a home and will have a minimal impact on the market.
Buyers: Yes, appreciation is slowing down finally, however, I am still expecting appreciation to steadily increase for the remainder of the year. When you take that appreciation and factor in that interest rates are very likely to continue to increase as well, if you are planning to buy a home in the next 6 months, now is the best time to really start talking to a lender and getting yourself into the market.
Sellers: It will be a good market for you this Fall. However it’s important to remember that appreciation is slowing down and interest rates are on the rise. This along with the traditional seasonal decline in buyers will lead to less people through your open houses and ultimately fewer offers. As long as you price your home correctly, the first time, you will still be able to get your home sold for top dollar, but the longer you wait to get it on the market, the longer it will take to sell you home. If you are thinking of selling this year, my recommendation is plan on getting your home on the market no later than mid-October. Escrow still takes an average of 30 days to complete and many buyers want to be in a new home before the holiday season(Thanksgiving) starts, so anytime after mid-October you risk buyers dropping out at slightly higher rates.