As we head into October and get closer to Halloween, the Orange County housing market forecast seems to be getting scarier by the day. Right now there are so many headlines out there that are often contradicting each other it makes it really hard to make sense of what is actually happening here in our local market. As always, let's take away the headlines and actually look at what the data shows in my Orange County Housing Market forecast for October 2022.
Fore a more in-depth look at the current market click the video above.
Key Orange County Housing Stats
Demand with interest rates reaching new 20 year highs demand has been severely impacted over the last few weeks and it's not going to improve anytime soon unless rates start to go down and stabilize. This is also the time of the year where we see demand naturally start falling as we head further into Fall before it start to plummet once we get to the middle of November. The combination of high rates and high home prices have forced many potential buyers to the sidelines due to affordability issues. It has also started to have a more dramatic impact on current home owners who want to move. If rates remain high expect this trend of historically low demand to continue for the foreseeable future.
Supply: If homeowners locked in the low rates we saw over the last two years, many times it doesn't make sense for them to move right now because they don't want to give up the extremely low mortgage payment. I n a lot of cases, even if the home owner sold and purchased a home in the same price range they would be looking at an increase of 50% for their mortgage which again doesn't make financial sense for a lot of owners. This is one of the many contributing factors that is keeping supply historically low.
Right now in Orange County we have about 3,600 homes on the market. Typically, when looking at non-covid years, we have about 80% more homes on the market this time of year so you can see what a problem this has become. This low inventory environment is also not going to be going away anytime soon and will only get worse if rates stay elevated as we head into the holiday season.
Interest rates more than anything else right now will be responsible for what happens in the market over the next 6-12 months. They have been more volatile over the last 3 months than anytime in recent history with swings of over a percent in less than a month. We have even seen rates fluctuate by more than a half of percent in just one day. As I write this, the average interest rate is hovering right around 6.8%, but they change so frequently it will probably be dramatically different in a week from now.
Average Days on Market(DOM) is currently 62 days. In almost all markets we have experienced before this would mean that we are still in a slight seller's market (between 60-90 days), however this we are not in normal times right now in the housing market so this traditional model is starting to show that it no longer works based. Close to 50% of all active homes on the market in Orange County have done price reductions and once all the September numbers are crunched we will probably see the average sale price fall below the list price for the first time since the start of the pandemic. This real time data I'm seeing while dealing with clients every day is showing me that we are currently in a balanced market not a slight seller's market. It will probably take a month or two for the numbers to reflect that because of the lag in data but that is where we are right now.
What does this all mean for the housing market?
So even though we are dealing with historically low demand, it's being matched with the historically low supply and unfortunately for anyone hoping for a housing crash in the near future are going to be disappointed. There are just not enough homes available right now to make that happen. Foreclosure wave, not going to happen, for multiple reasons I've discussed before, and homeowners are now staying in their homes longer than ever before in Orange County locking up even more potential inventory.
Right now because rates did shoot up even further demand is currently falling slightly faster than supply so we are starting to see Orange County transition into a balanced market for the first time in years where neither buyer or seller has a significant advantage. This type of environment is leading to more homes selling for below asking price and due to this, we are starting to see home values decline for the first time in years. However, at the current pace, again I want to emphasis ,don't expect to see any major decreases in the market.
Yes, there will be some areas of Orange County that do see their home value go down but we are talking about maybe a few percent even if rates remain high for the remainder of the year. Supply and demand are both too low to see any major movement right now one way or the other.
There is no way to sugarcoat this, now is going to be one of the hardest times financially to purchase a home due to the high rates and prices. There are going to be a lot of buyers that will need to sit on the sidelines and hope that rates come back down soon. However, right now there is a lot of fear and uncertainty in the market, and when that happens, as a lot of great investors know already, this a going to be one of best times to find a great deal on a home. In a lot of cases when you place an offer on a home you might be the only offer the seller gets which gives you a lot of power to be able to not only offer below asking price, but also ask the seller to credit you thousands of dollars to help you buy down your interest rates to make those monthly payments more affordable.
A lower rate for FREE? Yes please!
You will also have a good opportunity shop around before selecting a home, and once you get into escrow you are able to leave all of your contingencies in place to give you more protections to allow you to back out of the deal if needed. So if you talk to a lender and financially it's doable for you to afford home, it's going to be a great time to go shopping as seller's are getting desperate to get their homes into escrow before the holiday season slow down. Want even more advice for how to handle today's market? Make sure you watch the video above where I go into detail on what you have to watch out for when placing offers right now as well a a great tip to be able to get into escrow on a home today while still being able to take advantage of the low rates we saw over the last two years.
Are you thinking of buying a home in the next 12 months but don't know where to start? Contact me now for a free home buyer consultation where I will cover the step-by-step process of purchasing a home, go over the market conditions in more detail, and create a customized plan for you to get into your next dream home. Reply to this email or CLICK HERE to set up a time now!
This is your last call. If you want to take advantage of the current demand before it goes down even lower you need to get you house on the market NOW! If interest rates remain near the 7% level for the remainder of the year you will most likely, if you haven't already, start to see your home value slide by a few percent. Especially if your home isn't fully upgraded and move in ready. If you home looks like an HGTV home there is still a shot of selling it above market value as demand is still there, however if your house needs some work and has some deferred maintenance you need to expect that it will take a while to sell and you might not get full price offers even if you price it at market value right now. Want to know the top mistakes to avoid when listing a home right now and get an even more detailed break down of what to expect when trying to sell your home? Or perhaps you're interested in learning a strategy that might be available for you to offer the buyer an interest rate as low as what we saw last year with no cost to you to give you that competitive advantage? Make sure you watch the video above for all that and more.
Want to know what your home is worth as we approach the top of the market? CLICK HERE to get your HOME VALUE INSTANTLY. Or if you want a more in depth review where I fine tune the value of your home, go over what you would net from the sale, discuss marketing strategies that work in today's market, and give you up-to-date housing market info on your specific neighborhood reply to this email or contact me by phone (714)-366-2186 for the free home equity analysis now!