Market Talk with Vickie: March 2018
The Federal Reserve raised the federal funds rate by 25 basis points to 1.75% last month. This marked the sixth interest rate hike since December 2015 with two more increases expected later this year. Mortgage rates are at a highest in four years during which rates have been quite low. This month on “Market Talk with Vickie”, we will review the March 2018 Orange County market indicators amid some external factors. 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?
Orange County remains in a seller’s market month after month. March closed as another data point of low figures in Months Supply of Inventory (MSI) with 2.9 MSI for detached homes and 1.9 MSI for attached homes. Comparing the year-over-year change based on a 12-month average, the MSI has declined by 15.7% and 18.9% for detached and attached properties, respectively.
Are prices continuing to increase?
The Median Sales Price (MSP) for detached homes in March was $825,000, which is a new record high - exceeding last month’s record of $819,000 and is 7.8% higher than March 2017. The MSP for attached homes was $506,000, a reduction from last month, but still the second most expensive month to date and 6.5% higher than last March. The 12-month average year-over-year increase is 6.5% and 8.8% for detached and attached homes, respectively. The MSP will continue to climb upward as we approach the busiest real estate months.
How long will it take for my home to sell?
The March numbers for Days on Market (DOM) dropped significantly since the prior month with detached properties at 38 days and attached properties at 32 days. The year-over-year change for the 12-month average DOM fell 32.5% for detached homes and 40.3% for attached homes. In a low inventory market, active listings are getting snatched a lot faster.
How much of my asking price will I get?
In March, detached homes in Orange County sold for 98.2% of their original listing price while attached homes sold for even higher at 98.9% of the original price. The 12-month average through March is 97.4% and 98.3% for attached and detached homes, respectively, and the year-over-year change based on 12-month averages is 0.6% higher for both types of properties. Some cities in Orange County, such as Garden Grove, Tustin, Anaheim, Aliso Viejo, have been able to sell for over 100% of the listing price.
How affordable is the market?
The Orange County Housing Affordability Index in March was a historical low since November 2007 for both detached and attached properties, which are 45 and 85, respectively. That means the median household income is only 45% of what is necessary to qualify for the median-priced detached home under current interest rates. With interest rates expected to increase in 2018, we can expect affordability to decline even further. There is hope that the lack of affordability will act as a force to counterbalance the price appreciation.
How many homes are currently for sale?
The most pressing issue facing real estate is the lack of available housing. Inventory is the number of properties available for sale in active status at the end of a given month and Orange County has experienced double digit declines compared to a year ago. At the end of March, there were 4,282 active listings for detached homes and 2,021 active listings for attached homes, which in total is a 5.2% drop from last March. While inventory is cyclical depending on the time of the year, the year-to-year 12-month average decline is 14.8% and 18.8% for detached and attached properties, respectively.
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 April 10, 2018. Report provided by Orange County REALTORS®. Data © 2018 and provided by CRMLS, Inc as reported by the Orange County 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.