Market Talk with Vickie: February 2018
As we close the second month of 2018, certain trends are prevailing: lack of inventory, rising home prices, and decreasing home sales. Fewer homes on the market is the root of declining sales and unsatisfied demand, resulting in competitive bidding upwards. At the same time, we experienced rising mortgage rates, putting further stress on affordability. This month on “Market Talk with Vickie,” we will review the February 2018 Orange County market indicators. For a deeper review on the financial indicators mentioned below, please refer to this prior article.
Is it a buyer’s or seller’s market?
While the demand side of the housing market continues confidently in 2018, the supply side remains constrained in Orange County. February finished with another month of low values in Months Supply of Inventory (MSI) with 2.6 MSI for detached homes and 1.9 MSI for attached homes. Comparing the year-over-year change, the MSI remains constant for detached properties, but increased by 11.8% for attached properties; some good news for buyers seeking condos.
Are prices continuing to increase?
In February 2018, the Median Sales Price (MSP) for detached homes was $819,450, and for attached homes was $511,000. Both are historical MSP highs in Orange County, exceeding prior records in late 2017 and the beginning of 2018. The previous peak MSP was $800,000 for detached properties in October 2017 and $500,000 for attached properties in January 2018. The year-over-year increase represents a +8.5% (detached) and +13.6% (attached) change. All signs are pointing up as we approach the spring and summer months.
How long will it take for my home to sell?
The February Days on Market (DOM) fell slightly since the prior month with detached properties at 47 days and attached properties at 38 days on average. However, the year-over-year change is more significant with a declining days at 26.6% for detached homes and 25.5% for attached homes. This is great news for sellers, and also means that buyers need to act fast once they find a house that they like.
How much of my asking price will I get?
In February, detached homes in Orange County sold for 97.4% of their original listing price while attached homes sold for 98.2% of the original price. The month-over-month change have been consistently similar with tiny movements up and down. The 12-month average through February is 97.4% and 98.3% for attached and detached homes, respectively. Some cities in Orange County, such as Fountain Valley and Lake Forest, have been able to sell for 100% of the listing price. To remain competitive, buyers should make their initial offer closer to the listing price.
How affordable is the market?
For detached homes in February, less than half of households were able to afford to purchase the median priced home in Orange County, an all time low since 2007. For attached homes, February was at 85% affordability, which is also a historical low since mid-2008. Between 2008 and November 2016, the affordability index for attached properties was above 100%. Home prices are still expected to increase in 2018 with the imbalance between supply and demand. However, with upward pressure on prices, housing affordability will be negatively impacted and act as a force to counterbalance the price appreciation. Market competition and housing unaffordability will hopefully keep price appreciations under control.
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 March 10, 2018. 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.