Market Talk with Vickie: May 2018
Prospective home buyers will be in a competitive housing market over the next few months as families feel urgency to secure new homes before the start of a new school year and in light of rising mortgage rates. This month on “Market Talk with Vickie”, we will review the May 2018 Orange County market indicators amid a stable and healthy economy and growing demand unmet by supply.
Is it a buyer’s or seller’s market?
May experienced an uptake in the Months Supply of Inventory (MSI) from the prior month. The MSI was 3.4 months for detached homes and 2.5 for attached homes. Attached properties remain in a seller’s market while detached properties have shifted to a balanced market. When the MSI is between 3-4 months in Orange County, it means that home prices are increasing at a steady pace. As a year-over-year change, the MSI for the 12-months through May 2018 declined by 14.7% for all homes.
Are prices continuing to increase?
The Median Sales Price (MSP) for detached homes in May was $850,000, a $20,000 increase from April and the fourth consecutive month of record breaking prices! The May MSP for attached homes may have dropped from the last few months landing at $501,000, but is still up by 4.7% from May 2017. April 2018 MSP was the highest at $512,250. The 12-month average year-over-year increase ending in May is 5.9% and 8.9% for detached and attached properties, respectively. Home values are stretching high as we approach the summer season.
How long will it take for my home to sell?
The May Days on Market (DOM) remained steady from the prior month at just a few days over a month for the detached market, and a few days under a month for the attached market. The year-over-year change for the 12-month average DOM dropped 29.4% for detached homes and 36.7% for attached homes. Sellers can expect to receive a competitive offer on their homes within 30 days!
How much of my asking price will I get?
In May, detached homes in Orange County sold for 98.4% of their original listing price while attached homes sold for even higher at 99.0% of the original price. The 12-month average through May is 97.5% and 98.4% for attached and detached homes, respectively, and the year-over-year change based on 12-month averages is 0.5% higher for both types of properties. Some cities like Irvine are selling over asking at 100.2%.
How affordable is the market?
The Housing Affordability Index has been on a slow, but unwavering decline since late 2017. May finished with another historical low since November 2007 for both detached and attached properties. The median Orange County household income is 45% and 84% of what is necessary to qualify for the median-priced detached and attached property, respectively, under current interest rates. With interest rates expected to increase further in 2018, we can expect affordability to decline 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?
May was another month of significant inventory growth. At month end, there were 5,162 active listings for detached homes and 2,490 active listings for attached homes, which in total is a 19.8% boost from April. While the inventory does tend to pick up during the spring and summer months, the year-to-year 12-month average through May 2018 is still lower by 14.1% and 15.7% 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 June 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.