It is common knowledge that a great number of homes sell during the spring buying season. For that reason, many homeowners hold off putting their homes on the market until then. The question is whether or not that is a good strategy this year.

The other listings that come out in the spring will represent increased competition to any seller. Do a greater number of homes actually come to the market during this season in comparison to the rest of the year? The National Association of Realtors (NAR) recently revealed the months during which most people listed their homes for sale in 2018. This graphic shows the results:

The three months in the second quarter of the year (represented in red) are consistently the most popular months for sellers to list their homes on the market. Last year, the number of homes available for sale in January was 1,520,000.

That number spiked to 1,870,000 by May!

What does this mean to you?

With the national job situation improving and mortgage interest rates projected to rise later in the year, buyers are not waiting until the spring; they are out looking for homes right now.

Bottom Line

If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition amongst buyers. Beat the rush of housing inventory that will enter the market and list your home today!

If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition amongst buyers. Beat the rush of housing inventory that will enter the market and list your home today!

If you are looking to sell this year, waiting until the spring to list your home means you will have the greatest competition amongst buyers. Beat the rush of housing inventory that will enter the market and list your home today!

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Every where I turn these days I see signs or large billboards advertising selling your home for quick cash. The signs say, “sell your home UGLY” with the cartoonish Caveman. Often I think to myself, “why would anyone sell to these hawkish investors”? Whenever someone sells out of necessity or they need cash fast, do they ever get a fair price for their asset? For example, do you ever receive top dollar for anything sold at a pawn shop? The answer is easy. NO! No matter the circumstances, selling a house quickly and “UGLY” is never a good idea. In today’s market of extremely high priced houses, why would anyone sell without first consulting with a professional about getting TOP Dollar for their home. My point is this, it’s OK to sell quickly in a must need fast cash scenario, however, sell wisely and speak with a real estate professional first. I see so many investors taking advantage of homeowners by giving them pennies on the dollar because they need a quick sale for immediate cash. If this is you, let’s talk first. I propose we sell your home for TOP Dollar by me HELPING-YOU-FLIP your home for maximum profit to the seller, not the investor! Makes sense right? Dont sell your “UGLY” house for pennies on the dollar. Let me help you fix or repair your home so it can become a FLIP house and sell for TOP DOLLAR!

The end game here is simple. Don’t sell you home UGLY and miss out on the record high housing market. Let’s talk first. Let me HELP-YOU-FLIP your home for maximum profit.

• Need to sell, but you need cash immediately, no problem.
• Need to sell, but you don’t have the cash to remodel your kitchen and baths first, no problem.
• Need to sell, but your house needs paint and new carpet first, no problem.

Whatever the scenario, contact me first. Don’t sell to the Caveman for quick cash. Let me HELP-YOU-FLIP your home for maximum profit to the YOU THE SELLER!

Tell a friend! I love referrals!

Roy Hernandez
TNG Real Estate Consultants
Royaltyagent@gmail.com
cell/text 949.922.3947

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Hello!

With homes prices going up and no price relief on the horizon, lenders are coming up with new ways to get buyers into houses. My lender David Wood of 20 years has a new loan program for income qualified buyers short of a large down payment. See below for details.

1. Buyer puts 1% down.

2. We do a 97% loan with no PMI.

3. We do a 2nd loan for 2% of the price which has no payments and is forgiven at the end of three years.

4. Good in Orange and LA Counties only. More details below.

Contact me if you or someone you know is interested in the loan.

In a perfect world, you’d be able to move out of your old home and into your new one before putting your old house on the market.

But (sadly) this is the real world. So there’s a strong likelihood that you may need to keep living in your home while you’re selling it—along with all the stuff you need to actually live.

It’s a delicate balance that nearly every seller faces. But there’s no need to worry: If you can’t store your belongings off-site and professionally stage your home, you can still make it look like you did. The key is hiding your junk, and hiding it well.

Know where buyers will look

Your first inclination might be to shove all your stuff into your home’s natural storage spaces—in closets, under cabinets, or in utility areas such as the laundry room or garage. But here’s the problem with that plan: Eager buyers, yearning for storage space, are going to peek in those very spaces.

“Storage space sells homes, and you want home buyers to think you have plenty of it,” says Noelle Nielsen, a real estate professional with Re/Max Advantage Plus in Eagan, MN.

Do you really want rolls of wrapping paper and boxes of old yearbooks spilling out onto potential buyers every time they open the front hall closet? No—and they don’t either. It will be a major turnoff because buyers want to know they’ll have enough room to store their stuff. In fact, stagers recommend that you clear out half of each closet to give buyers the impression of space.

Cut down on your junk

You want buyers to notice your house, not your random stuff. And the key to that is having less stuff to begin with.

When I was buying my first home, I toured houses full of creepy doll collections; built-in bookshelves jam-packed with old magazines and older newspapers; and entire bedrooms almost entirely stuffed with boxes. What I remember about those homes is the clutter. What I can’t even recall are details about the number of bedrooms or size of the kitchen.

So don’t just spend a couple of hours before the first showing tossing unwanted stuff in a donation pile. As soon as you decide you’re going to sell, take a thorough look at your stuff and try to see it the way a buyer would.

“Living somewhere daily reduces the things you notice that might be a problem,” says Marty Basher, a home organization expert for Modular Closets. “You need to take a critical eye to your home and get rid of all the junk that irritates you. If it irritates you, it will certainly turn off a buyer.”

And don’t just address the spots you can see when you first walk in.

For example, “if there’s clutter above your fridge, organize it—or better yet, find a place to hide it,” Nielsen says. Or throw it out! Do you really still need that 10-year-old Emeril Lagasse cookbook?

Act like you’re going to college

If you’re still living in the home, there will be some rooms you simply need to use every day. But there is a trick you can use to keep them seemingly pristine.

“I tell my clients to act like they’re going to college,” Nielsen says. Starting with the bedroom, she recommends packing any clothes and shoes you’re not using now in suitcases and then store those suitcases neatly under the bed or in the closet.

Once you’ve done that, go a step further and get obsessive about your closets. “Organize by color,” Nielsen says. “It looks good and makes people feel like they’re walking through a store.”

Store like a pro

So, you’ve decluttered and donated and decluttered again. But you still have all this stuff. Where do you hide it where it won’t be discovered by would-be buyers?

If you don’t have the means to rent a storage space, then think low and think high. Buyers aren’t likely to peek under your bed, behind the dresser, or in your attic. Make these your primary storage areas for knickknacks, seasonal items, and other bulk.

In the kitchen, move your miscellaneous items and bulkier tools to the very back of the top shelf in your overhead cabinets, getting it out of the line of sight. For the lower cabinets, make sure dishes are stacked neatly and there’s plenty of space around each item. Store your coffee, food, and spices in wicker baskets, and place the baskets in the pantry.

In the bathroom, pack up anything you don’t use regularly—like that extra set of curlers or the electric razor you haven’t touched since you started shaving. For everything else, invest in a couple of shower caddies.

“When you have a showing, you can easily store the caddy under the sink,” Nielsen says.

Keep the same neat and tidy appearance in the other rooms of your house. If you want bonus points, get rid of any countertop storage containers or over-the-door hangers for items such as jewelry, shoes, or toiletries. As a buyer, seeing storage containers out in the open signals, “Hey, there isn’t enough storage here so we had to get creative.”

Just remember human nature: If buyers can peek inside a room, cabinet, or drawer, they probably will.

By Angela Colley | Oct 19, 2017 | Realtor.com

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Hello!

The lack of homes for sale in Orange County has hit pending
sales activity.

Supply Cuts Pending Sales: The number of pending sales over the past month dropped by 7% due to a supply of homes that is now dropping as well.

Homeowners have been behaving differently ever since the Great Recession began a decade ago. A trend evolved and it has not changed since 2008. That trend is a drought of homeowners opting to sell their homes. In fact, this year it has been even more pronounced.

The number of homes placed on the market this year is the second lowest level this century behind 2012. The lack of homes FOR SALE back then was understandable as home values were only starting to rise and many homeowners were upside down in their homes, owing more than their homes were worth. Flash forward five years later to today and home values have appreciated substantially (the median value of a resale home has increased by more than 60%). Even with the extra equity, homeowners are opting to stay put and are not moving. The trend continues.

This year, there have been 7% fewer homes that have come on the market compared to last year, 2,055 fewer to be exact. For perspective, there have been 18,000 fewer FOR SALE signs this year compared to 2004. This lack of inventory has hurt the true potential for closed sales. With interest rates below 4%, buyers have been chomping at the bit to purchase; yet, they face stiff competition due to a lack of supply.

Today there are 20% fewer choices on the market compared to last year, 5,639 versus 7,040. As a result, the number of pending sales over the prior month (how Reports On Housing gauges demand), dropped in the past couple of weeks by 7%, with 201 fewer pending sales, now totaling 2,624. Today’s demand is 3% off of last year’s 2,719. The lack of supply is truly cutting into the number of pending sales and has undercut demand.

True demand, buyers ready, willing and able to buy today, is much higher than the pending sales count is showing simply because of not enough choices. There are insufficient homes FOR SALE in the lower ranges, homes priced below $750,000. This range accounts for 39% of the inventory and 60% of demand. If there were more homes available within this range, the number of pending sales, and ultimately closed sales, would skyrocket. This price range is underserved as fewer and fewer homeowners are electing to sell. There are 41% fewer active listings available today below $500,000 compared to last year, and the expected market time (the amount of time it will take a home placed on the market today to open escrow) is a blistering hot 36 days. There are 22% fewer homes available between $500,000 and $750,000, and the expected market time is a hot 46 days. These hot markets are a direct result of a skimpy supply all year long.

There are 25% fewer homes on the market between $750,000 to $1 million, yet the expected market time is at 56 days, not as hot as the lower price ranges. Even though there are fewer choices for buyers, sellers better be priced on the money or they won’t be successful. For homes priced above $1 million, there may be slightly fewer homes on the market compared to last year; however, the expected market time runs from 93 days ($1 million to $1.25 million) to 460 days ($4 million and up). These sellers not only need to be priced precisely on target, they must pack their patience as well.

The bottom line: the Orange County housing market could use more homes on the market, especially in the lower ranges. This lack of inventory has diminished the number of pending and closed sales and has prevented local housing from reaching its full potential.

Active Inventory: The active inventory dropped by 4% over the past couple of weeks. The active listing inventory shed 223 homes in the past two weeks and now sits at 5,639. It is the lowest level for this time of the year since 2012. The active inventory is falling as expected now that the Autumn Market is here. It will continue to trend down through the remainder of the year, picking up steam after Thanksgiving, the start of the Holiday/Winter Market.

Last year at this time, there were 7,040 homes on the market, 1,401 additional homes or 25% more than today.

Demand: Demand decreased by 7% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 201 pending sales, or 7%, in the past two-weeks and now totals 2,624. The drop is primarily due to a lack of available choices in the lower ranges below $750,000. For homes priced above $750,000, with the only exception being homes between $1.5 million to $2 million, demand is actually up year over year. There have also been slightly more homes placed on the market year over year for these higher price ranges.

Last year at this time, demand was at 2,719 pending sales, 95 more than today.

Luxury End: Luxury demand plunged by 7% in the past couple of weeks and the inventory dropped by 1%.
In the past two weeks, demand for homes above $1.25 million decreased from 385 to 358 pending sales, a 7% drop. The luxury home inventory decreased from 2,002 homes to 1,979, a 1% drop. As a result, the expected market time for all homes priced above $1.25 million increased from 156 days to 166 days. The luxury inventory and demand will continue to drop through the end of the year.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 98 to 90 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 134 to 171 days. For homes

priced between $2 million and $4 million, the expected market time increased from 185 days to 198 days. In addition, for homes priced above $4 million, the expected market time decreased from 462 to 460 days. At 460 days, a seller would be looking at placing their home into escrow around the mid-December 2018.

Orange County Housing Market Summary:

• The active listing inventory decreased by 223 homes in the past couple of weeks, and now totals 5,639. The trend is down for the remainder of the year. Last year, there were 7,040 homes on the market, 1,401 more than today.

• There are 41% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 21%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.

• Demand, the number of pending sales over the prior month, decreased by 201 homes in the past couple of weeks, down 7%, and now totals 2,624. The average pending price is $860,101.

• The average list price for all of Orange County increased from $1.6 million to $1.7 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.

• For homes priced below $750,000, the market is HOT with an expected market time of just 42 days. This range represents 39% of the active inventory and 60% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 56 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 93 days, a balanced market that does not favor a buyer or seller.

• For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 98 days to 93. For homes priced between $1.5 million and $2 million, the expected market time increased substantially from 134 to 171 days. For luxury homes priced between $2 million and $4 million, the expected market time increased from 185 days to 198 days. For luxury homes priced above $4 million, the expected market time decreased from 462 to 460 days.

• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.

• The expected market time for all homes in Orange County increased in the past couple of weeks from 61 days to 62 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise as housing makes its way through the Autumn Market.

• Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 2.4% of demand. There are only 33 foreclosures and 54 short sales available to purchase today in all of Orange County, that’s 87 total distressed homes on the active market, increasing by 5 in the past two weeks. Last year there were 125 total distressed sales, 44% more than today.

• There were 3,110 closed sales in August, a 12% increase over July 2017 and a 1.3% increase over August 2016. The sales to list price ratio was 98.1% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.7%. That means that 98.5% of all sales were good ol’ fashioned equity sellers.

Have a great week.

Sincerely,
Roy A. Hernandez
TNG Real Estate Consultants
Cell 949.922.3947

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Good Afternoon!

With an extremely low inventory and blistering demand, the
Autumn Market is poised to be the hottest in years.

A Hot Autumn: With 19% fewer FOR SALE signs this year compared to last, the Autumn Market is going to be hot.

It is that time of the year. Have you seen all of the signs? The leaves are starting to fall, the kids are back in school, and Costco already has Halloween costumes. That is right, autumn is here. The official start to autumn is not until Friday, September 22, but all of the signs are here.

As for Orange County housing, the Autumn Market typically starts around the end of August when the kids head back to their classrooms. It’s no longer the “prime” season for real estate. Both the Spring and Summer Markets are in the past. Housing will now shift gears and transition to a slower time of the year. This year will not be an exception, demand will fall, sales will fall, and the expected market time will start to rise. Nevertheless, this year will be the hottest Autumn Market since 2005.

Today, there are 19% fewer FOR SALE signs on the active listing inventory right now compared to last year at this time. In fact, the last time the supply of homes was this low at the end of August dates back to 2012 when the active inventory was dropping like a rock. And, in spite of this year being the second fewest number of homeowners opting to place their homes on the market this century (2012 was the lowest), demand has remained strong. Demand, the number of new pending sales over the prior month, is still at end of March levels. As a result, the current expected market time is at levels not seen since 2013.

The expected market time takes into account both supply and demand. It is the amount of time a seller can expect to be on the market before opening up escrow. It is the velocity of the market as a whole. Todays expected market time is 62 days, 19% lower than last year’s 77 days. At 62 days, all of Orange County it is a seller’s market. It is no longer a HOT seller’s market, below 60 days, as it was from the end of January to the middle of June of this year, but it is still hotter than July’s 63 day expected market time.

Everything priced below the $1 million mark, is flying off the shelves. The expected market time for homes priced below $500,000 is 34 days. Now that is hot! Above $1 million is a bit of different story, the higher the price, the slower the market. For homes priced above $4 million, the expected market time rises to 462 days.

From here, we can expect the active listing inventory to continue to fall throughout the remainder of 2017. Demand, in terms of new pending sales, will slowly but surely drop throughout the Autumn Market. It will then drop like a rock from Thanksgiving through the end of the year. With both the inventory and demand dropping, the expected market time will only rise slightly for the remainder of the year.

A warning for sellers: do not stretch the asking price much at all. Word from the real estate trenches indicates that many homeowners in the lower ranges are sitting on the market with very little activity and no offers to purchase because of price. In spite of the hotter real estate market, buyers are not willing to overpay for a property. As a seller, if you have been on the market for a while and the number of buyer showings has dropped considerably, the market is speaking to you. It is most likely the price. Homes that are priced well, taking into consideration condition, upgrades, and location, will attract offers to purchase.

A warning for buyers: do not expect the market dynamics to change much in the coming months. Even with a drop in buyer demand during the autumn and Holiday Markets, meaning less buyer competition, there will also be a drop in the number of homeowners placing their homes on the market. Many homeowners will opt to pull their homes off of the market now that both the Spring and Summer Markets are in the rearview mirror. Ultimately, there will be fewer choices. With a drop in both supply and demand at the same time, the expected market time will not fluctuate much.

 Active Inventory: The active inventory dropped only slightly during the past couple of weeks.
The active listing inventory shed 15 homes in the past two weeks and now sits at 5,862. Fifteen homes may not be a lot, but it illustrates the direction that the active listing inventory will be heading for the remainder of the year: DOWN. It is the second lowest level this century, trailing only 2012. Typically, the inventory peaks around mid-August, but this year it peaked in mid-July.

Last year at this time, there were 7,267 homes on the market, 1,405 additional homes or 24% more than today.

Demand: Demand decreased by 2% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 65 pending sales, or 2%, in the past two-weeks and now totals 2,825. Demand is off the most in the lower end, homes priced below $750,000. Today, there are 39% fewer homes available below $500,000 compared last year at this time and demand is off by 20%. Obviously, there is plenty of pent up demand and this data point would be through the roof if there were more homes available. Demand is off by 7% for homes priced between $500,000 and $750,000 with 20% fewer homes on the market. Above $750,000, demand is stronger this year compared to last year despite fewer homes on the market.

Last year at this time, demand was at 2,843 pending sales, 18 more than today.

Luxury End: Luxury demand increased by 4% in the past couple of weeks and the inventory dropped by 3%.
In the past two weeks, demand for homes above $1.25 million increased from 369 to 385 pending sales, a 4% increase. The luxury home inventory decreased from 2,072 homes to 2,002, a 3% drop. As a result, the expected market time for all homes priced above $1.25 million dropped from 168 days to 156 days. The luxury inventory will continue to drop through the end of the year. Similarly, luxury demand will drop significantly through the end of the year, but it will bounce around a bit, typically increasing slightly in October.

For homes priced between $1.25 million and $1.5 million, the expected market time decreased from 110 to 98 days. For homes priced between $1.5 million and $2 million, the expected market time increased from 130 to 134 days. For homes priced between $2 million and $4 million, the expected market time decreased from 224 days to 185 days. In addition, for homes priced above $4 million, the expected market time decreased from 480 to 462 days. At 468 days, a seller would be looking at placing their home into escrow around the start of December 2018.

looking at placing their home into escrow around the start of December 2018.

Orange County Housing Market Summary:

• The active listing inventory decreased by 15 homes in the past couple of weeks, and now totals 5,862. The trend is down for the remainder of the year. Last year, there were 7,267 homes on the market, 1,405 more than today.

• There are 39% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 20%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.

• Demand, the number of pending sales over the prior month, decreased by 65 homes in the past couple of weeks, down 2%, and now totals 2,825. The average pending price is $866,086.

• The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.

• For homes priced below $750,000, the market is HOT with an expected market time of just 40 days. This range represents 40% of the active inventory and 60% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 57 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 19% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is 78 days, a tepid seller’s market with very little appreciation.

• For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 110 days to 98. For homes priced between $1.5 million and $2 million, the expected market time increased from 130 to 134 days. For luxury homes priced between $2 million and $4 million, the expected market time dropped from 224 days to 185 days. For luxury homes priced above $4 million, the expected market time decreased from 480 to 462 days.

• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 14% of demand.

• The expected market time for all homes in Orange County increased in the past couple of weeks from 61 days to 62 days, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise as housing makes its way through the Autumn Market.

• Distressed homes, both short sales and foreclosures combined, make up only 1.4% of all listings and 2.7% of demand. There are only 30 foreclosures and 52 short sales available to purchase today in all of Orange County, that’s 82 total distressed homes on the active market, dropping by 6 in the past two weeks. Last year there were 136 total distressed sales, 66% more than today.

• There were 2,768 closed sales in July, a 14% drop over June 2017 and a 1.9% decrease over July 2016. The sales to list price ratio was 98.2% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales and short sales accounted for 0.8%. That means that 98.4% of all sales were good ol’ fashioned equity sellers.

Have a great week.

Sincerely,
Roy Hernandez
TNG Real Estate Consultants
Cell 949.922.3947
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Home sellers see biggest profits in a decade — not just because of higher prices

• The average tenure of a homeowner who sold in the second quarter of this year came in at just over eight years.
• That’s the longest since the year 2000 when Attom Data Solutions began tracking the metric.
• During the last housing boom, in the mid-2000s, the average homeownership tenure was around four years.

In this hot housing market, home sellers are racking up bigger profits on their homes than they have in a decade. Fast-rising home prices, coupled with homeowners staying put longer than usual are driving the trend.

The average tenure of a homeowner who sold in the second quarter of this year came in at just over eight years, the longest since the year 2000, when ATTOM Data Solutions began tracking the metric. During the last housing boom, in the mid-2000s, the average homeownership tenure was around four years.

Home values recently hit a record high, according to various surveys, and they continue to climb, as demand easily outpaces the supply of homes for sale. Add price gains to increased tenure, and home sellers are now seeing the greatest returns in 10 years. For those who sold in the second quarter of this year, they saw an average profit of $51,000, a 26 percent return.

Regionally, sellers saw the biggest profits in San Jose, California, with 75 percent; San Francisco with 65 percent; Seattle with 63 percent; Modesto, California, with 62 percent; and Denver with 62 percent.

It begs the question, if profits are high and homeowners have been stagnant, why don’t more people decide to move?

 

 

 

 

 

 

 

 

“While it’s the most profitable time to sell in a decade, it’s also extremely difficult to find another home to purchase, which is helping to keep homeowners in their homes longer before selling,” said Daren Blomquist, senior vice president at Attom Data Solutions. “And the market is becoming even more competitive, with the share of cash buyers in the second quarter increasing annually for the first time in four years.”

Cash sales accounted for close to 29 percent of all single-family and condo sales in the second quarter, up from 27 percent during the same period in 2016.

As with everything in real estate, local market dynamics affect that share. Among major metropolitan areas with a population of at least 1 million, those with the highest share of all-cash sales were Raleigh, North Carolina, at 57.4 percent; Miami with 46.2 percent; Detroit at 45.2 percent; Oklahoma City at 44.6 percent; and Tampa-St. Petersburg, Florida, at 43.2 percent.

Those markets see an outsized share of both investors and foreign buyers, and both of those cohorts tend to favor cash.

 

Diana Olick | @DianaOlick-CNBC
Thursday, 27 Jul 2017 | 10:55 AM ET

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Hello!

With half of 2017 in the rearview mirror, it is helpful to take a
look at where housing has been, where it is now, and where
it is heading.

Housing Checkup: Every once in a while, it is helpful to take a step back and evaluate the overall health of the current housing market and the latest trends.
The Orange County housing market has been hot for a very long time. It is working on its sixth year of continuous appreciation. Home values have surpassed record heights reached in June of 2007. There have not been enough homes on the market, buyers continue to trip over each other in pursuit of their piece of the American Dream, and multiple offers are the norm. That adequately describes the first half of 2017, so where do we go from here? Will it be more of the same or will the market evolve?

Let’s take a step back from the relentless real estate market for a moment. With a stethoscope, thermometer, and blood pressure cuff in hand, here are the latest trends and current heartbeat of the Orange County housing market:

• 2017 has been the year of the extremely lean active inventory. The year started with only 4,071 homes on the market, the lowest level since 2013. Since then, the active inventory has grown, but at a much slower pace than normal. It has been slim pickings. There have been 6% fewer homes placed on the market so far this year compared to 2016. In the past month alone, 11% fewer homes have entered the fray, resulting in an active inventory that only grew by 78 homes. It seems as if the housing market has already peaked, yet the inventory has not quite reached the 6,000 home mark. The inventory needs to be at 8,000 homes for it to move away from a seller’s market to one that is balanced, not favoring a buyer or seller; but that is not going to happen anytime soon. Today’s inventory is 18% lower than last year. It will remain at about 6,000 homes through the rest of the Summer Market and then will start to fall during the Autumn Market as unsuccessful homeowners throw in the towel, realizing that both the Spring and Summer Markets will be in the past.
• Demand has been hot this year, but has been muted a bit due to a lack of inventory. With fewer homes coming on the market this year, demand has not reached its full potential. In spite of that, it has reached levels similar to last year, surpassing 2016 for the first couple of months. From there, it has fallen slightly short of last year’s levels. The latest reading has demand surpassing 2016 slightly. From here, demand will slowly drop as summer progresses. It will continue its descent throughout the Autumn Market and will reach the lowest levels of the year during the Holiday Market, Thanksgiving through January 2018. With demand slowing a bit due to all of the summer distractions, carefully pricing is fundamental in order for sellers to find success. That will hold true for the remainder of the year.
• The expected market time is on the rise, but the overall market is a lot hotter than last few years. Supply (the inventory) and demand (recent pending sales) determines the expected market time. That is the amount of time it will take for a newly listed home to be placed into escrow. When it drops below 2 months, it is a HOT seller’s market. From February through the mid-June, the market was HOT, two months longer than last year. Since then, the market has exceeded 60 days, indicating a tepid seller’s market. In a tepid seller’s market, carefully pricing is essential and appreciation slows. Sellers were getting away with stretching the asking price and home values were appreciating swiftly. With the Summer Market rolling along, the pace has slowed a bit. For all of Orange County, it has risen from 51 days in the heart of the Spring Market to 63 days today. All price ranges are slowing, but it is still HOT below $750,000. It is important to note that the higher the price, the longer it takes to find success. The market will continue to slow throughout the summer. As the market downshifts, buyers move away from a willingness to pay any price to obtain a home, to a strong desire to pay the Fair Market Value for a home, a value determined by the most recent pending and closed sales. It will remain a tepid seller’s market for the remainder of 2017.
• Closed sales are slightly higher than last year and it looks as if that will not change for the remainder of the year. Through the first half of the year, there have been 15,658 closed sales compared to 15,219 last year, 3% more. With slightly higher demand for the remainder of the year, closed sales will remain a bit higher than last year.
• Luxury home sales have surpassed last year’s record pace, but there is still a lot of seller competition to overcome in order to find success. The luxury market is best defined as the top 10% of closed sales, or $1,250,000 and higher. For the first six months, there have been 1,864 closed luxury sales compared to 1,532 last year, 22% more. That is a record number of luxury sales in Orange County. However, as of today there are 2,089 active listings above $1,250,000, more than have sold in the first half of this year. Today, the expected market time for luxury homes is 190 days. For proper perspective, that would mean that escrow would open up at the end of January of next year. Keep in mind, the expected market time is even longer in the higher price ranges. For homes priced above $2 million, the expected market time is 269 days, opening escrow in April 2018.
• In spite of the Federal Reserve raising the short-term rate, interest rates have slowly inched their way back below 4%. The Federal Reserve has been talking a big game for a few years now about raising the short-term rate. After years of bluffing, they have backed up all of the talk and have raised rates three times, including the one last December. Yet, rates have not been behaving at all like expected by economic experts or prognosticators. After the presidential elections in November, interest rates climbed significantly at the prospect of inflation and reached 4.375% by the end of 2016. However, with the realization that the new presidential administration’s inflationary policies may take years to implement, long-term interest rates have floated back down to below 4%, reaching 3.91% in June. As international economic uncertainty continues, everybody is seemingly “parking their money” in US Treasuries as a “safe haven,” ultimately insuring that the low interest rate environment continues. Interest rates will not change much for the remainder of the year and they will continue to stoke the flames of demand.

Active Inventory: The active inventory increased by only 47 homes in the past couple of weeks.
The active listing inventory added an additional 47 homes in the past two-weeks, a 1% increase, and now sits at 5,983, poised to surpass the 6,000 home mark. The inventory is only slowly growing and it looks as if this year’s peak will be right around that 6,000 home mark. Quite simply, not enough homes are coming on the market as more and more homeowners are opting to stay put.

Last year at this time, there were 7,329 homes on the market, 1,346 additional homes or 22% more than today.

 

Demand: Demand decreased by 2% in the past couple of weeks.
Demand, the number of homes placed into escrow within the prior month, decreased by 55 pending sales in the past two-weeks and now totals 2,830, a 2% decline. Demand is off the most in the entry-level market, homes priced below $500,000. With 38% fewer homes available below $500,000 compared to this time last year, it is no wonder that demand is off by 18% year over year.

Last year at this time, there were 47 fewer pending sales, totaling 2,783. The current expected market time increased from 62 to 63 days in the past couple of weeks, a much hotter market than last year’s 79 days. At 63 days, the market is no longer a HOT seller’s market, but a tepid seller’s market with muted appreciation.

 

Luxury End: Luxury demand decreased by 4% in the past couple of weeks while the inventory grew by 1%.
In the past two weeks, demand for homes above $1.25 million decreased from 344 to 329 pending sales, a 4% decline. The luxury home inventory increased from 2,068 homes to 2,089, up 1%. The luxury market downshift is due to summer distractions. The supply is up and demand is down.

For homes priced between $1.25 million and $1.5 million, the expected market time increased from 120 to 123 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 155 to 176 days. In addition, for homes priced above $2 million, the expected market time increased from 266 days to 269 days. At 269 days, a seller would be looking at placing their home into escrow around the beginning of April of next year.

 

Orange County Housing Market Summary:

• The active listing inventory increased by just 47 homes, or 1%, in the past couple of weeks, and now totals 5,983, knocking on the door of the 6,000 home level. Last year, there were 7,329 homes on the market, 1,346 more than today.

• There are 38% fewer homes on the market below $500,000 today compared to last year at this time and demand is down by 18%. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is slowly disappearing.

• Demand, the number of pending sales over the prior month, decreased by 2% in the past couple of weeks, dropping by 55 pending sales and now totals 2,830. The average pending price is $829,260.

• The average list price for all of Orange County remained at $1.6 million. This number is high due to the mix of homes in the luxury ranges that sit on the market and do not move as quickly as the lower end.

• For homes priced below $750,000, the market is HOT with an expected market time of just 39 days. This range represents 39% of the active inventory and 63% of demand.

• For homes priced between $750,000 and $1 million, the expected market time is 57 days, a hot seller’s market (less than 60 days). This range represents 18% of the active inventory and 20% of demand.

• For homes priced between $1 million to $1.25 million, the expected market time is at 93 days, a balanced market that does not favor a buyer or seller.

• For luxury homes priced between $1.25 million and $1.5 million, the expected market time decreased from 120 to 123 days. For homes priced between $1.5 million to $2 million, the expected market time increased from 155 to 176 days. For luxury homes priced above $2 million, the expected market time increased from 266 to 269 days.

• The luxury end, all homes above $1.25 million, accounts for 34% of the inventory and only 11% of demand.

• The expected market time for all homes in Orange County increased from 62 days to 63 in the past couple of weeks, a tepid seller’s market (60 to 90 days). From here, we can expect the market time to slowly rise throughout the Summer Market.

• Distressed homes, both short sales and foreclosures combined, make up only 1.5% of all listings and 1.8% of demand. There are only 36 foreclosures and 51 short sales available to purchase today in all of Orange County, that’s 87 total distressed homes on the active market, 11 more than two weeks ago. Last year there were 128 total distressed sales, 47% more than today.

• There were 3,229 closed sales in June, a 3% increase over May 2017 and a 3% increase over June 2016. The sales to list price ratio was 97.9% for all of Orange County. Foreclosures accounted for just 0.99% of all closed sales and short sales accounted for 0.87%. That means that 98% of all sales were good ol’ fashioned equity sellers.

 

Have a great week.

Sincerely,
Roy A. Hernandez
TNG Real Estate Consultants
Cell 949.922.3947
Royaltyagent@gmail.com

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