Market Talk with Vickie: Oct 2017
The question I get asked most frequently is “how is the housing market doing?” In my MTV (“Market Talk with Vickie”) series, I will answer this question by sharing data on home sales, prices, and other relevant indicators. I will also answer the question separately for attached and detached properties as you’ll see that these homes have quite different activity.
Is it a buyer’s or seller’s market?
A seller’s market is characterized by low inventory and high demand and a buyer’s market is characterized by high supply and low demand. Often we forget the third market type, called a balanced market when prices are increasing at a steady pace. The type of market we’re in is measured by Months Supply of Inventory (MSI), which is how long it would take for the homes currently available to sell at the market’s present pace. In Orange County, a seller’s market has less than 3 months of inventory, a buyer’s market has more than 4 months, and a balanced market is between 3-4 months. For detached homes, we ended October 2017 with 2.8 months of inventory so we are in a slight seller’s market. For attached homes, there is 2.1 months; a clear seller’s market.
How long will it take for my home to sell?
The length of time a listing is on the active market before an offer is accepted (or a broker listing agreement ends) is measured by the Days on Market (DOM). For detached homes, it’s 47 days compared to 35 days for attached homes. There is faster movement on attached homes because of the lower price point. You’ll want to add 5-45 days for the escrow period (depending on the buyer’s financing) from when an offer is accepted until you receive the monies.
How much of my asking price will I get?
In October, detached homes in Orange County sold for 96.8% of their original listing price while attached homes sold for 98.0% of the original price. Compared to one year ago, this is a 0.6% increase! In 2017, the month with the highest percentage for both detached and attached homes was May at 98.0% and 99.0%, respectively.
Are prices continuing to increase?
Let’s take a look at the Median Sales Price (MSP). In real estate, we prefer the median sales price over the average price so that the statistic is not skewed by outliers - like the $45,000,000 Laguna Beach home that sold in February 2016! For the month of October, the MSP for detached homes was $800,000, which is a 6.2% increase from last year. May and September 2017 also ended with $800,000 – the highest months we’ve seen in the Orange County market. For attached homes, the MSP was $470,000, which is a 5.1% increase from last October. The highest month for attached properties was September 2017 which landed at $490,000.
How affordable is the market?
The Housing Affordability Index (HAI) measures whether or not a typical family earns enough income to qualify for a mortgage loan on a typical home based on the most recent monthly price and income data. For detached homes in October, only 50% of households were able to afford to purchase the median priced home in Orange County, an all time low since 2007. For attached homes, October was at 95% affordability, which is also a historical low since mid-2008. Between 2008 and November 2016, the affordability index for attached properties has always been above 100%.
If you are interested in learning more about a particular city in Orange County or neighborhood in Irvine, send me a message and I’d be happy to share more information with you. All the statistics I mentioned are important to understand as part of your buying or selling strategy. Let me help you get the competitive edge!
Source: Current as of November 10, 2017. The report above was written using data from CRMLS, Inc as reported by the Orange County Association of REALTORS®. The accuracy of all information is deemed reliable but not guaranteed and should be personally verified through personal inspection by and/or with the appropriate professionals.