November 11, 2012 – by Scot Campbell– Source: Steve Thomas, ReportsOnHousing.com
Today, Steve Thomas of Reports on Housing reported that the active listing inventory has reached an unprecedented record low, well below lows reached during 2005. Here are more observations from Mr. Thomas for Orange County along with some of my own for the Huntington Beach market:
Active Listing Inventory:
The active listing inventory dropped another 290 homes in the past two weeks and now stands at 3,753, 24% below the prior low record established in March 2005, when everybody had a hard time navigating with just 4,912 homes on the market. Unbelievably that was an additional 1,159 more homes than today.
These lows are absolutely unprecedented and so incredibly low that it is currently applying tremendous pressure on housing values. Quite simply, everything that is coming on the market below $750,000 that is priced right is absolutely flying off the market. Buyers are now willing to pay a few thousand dollars above the last closed sale. Closed sales are establishing higher prices throughout Orange County.
For those homeowners hanging onto every word written thus far, please do not get ahead of yourselves. Buyers are not going to pay an additional 10% above the last comparable sale no matter your desire or needs. Homes are appreciating at a very slow rate, not thousands of dollars every month. These new levels have been reached over the span of 12-months, not a month. When homeowners hear of year over year appreciation of 6%, they often list at 6% or 10% above the last sale and expect the market to absorb the higher price immediately. Regardless of the craziness of today’s market, buyers are still not ready to pay well above recent comparable sales. Instead, prices will gradually increase and reach noticeably higher levels over months.
So, where in the world are all of the homes for sale? Homeowners are just not placing their homes on the market. Currently, there are 19% fewer homes coming on the market over the past month compared to the same month last year. Owners are holding their homes off the market in unison. Many cannot sell because their homes are so far under water that they just cannot afford to bring money to the closing table in order to sell. Most have opted not to sell because they believe that their homes are going to appreciate over the course of the next year or two. After years of falling values, their homes are finally trending up. They have watched their investments depleted and now they are sitting on the fence waiting for the market to replenish some of their losses.
As buyers, navigating the current market takes expertise, patience, and perseverance. Experienced REALTORS® will tap into their network of agents, past clients, friends, family, and their sphere of influence to attempt to isolate an owner contemplating listing their home prior to the home ever hitting the market. When homes do hit the active market, they generate tremendous, immediate interest with multiple showings, multiple offers, and prices moving in the upward direction. Falling in love with a home is forbidden unless the buyer is the lucky highest bidder. It often takes several offers on many homes in order to be successful.
For buyers waiting for the holiday market in order to take advantage of what is considered the best time of year to be a buyer, not this year. Like it or not, the holidays are already here. Starbucks holiday cups are back, so is the Christmas music and holiday aisle in the local grocery store. But, there is nothing on the market and too many buyers are hoping that the housing market will cool with all of the distractions of the holidays. Instead, the few homes that do hit the market are going to generate incredible activity and competition.
Mr. Thomas has the following Prediction for 2013:
The inventory will remain at these anemic levels for the remainder of the year and well into January 2013. Inventory is going to be a problem in 2013 as well. The presidential election is not going to change the direction of the housing market.
There will not be a noticeable increase in distressed sales. There will be no wave of foreclosures. Homeowners are not going to flood the market.
These fabrications are circulating among the real estate trenches and they are simply conjecture and baseless. They are not going to happen. What you see is what you get: slim inventory, strong demand, a tiny number of foreclosures, more short sales, a majority of good ol’ fashioned sellers with equity in their homes, and no big shifts in the market.
Last year at this time there were 9,543 homes on the market, two and half times more than today.
Demand for Homes:
Despite the drop in number of homes hitting the market, demand surprisingly increased in the past couple of weeks.
Demand, the number of new pending sales over the prior month, increased by 34 homes in the past two weeks, reversing the recent trend of dropping due to such a significant lack in inventory. This helps establish how eager buyers are despite the customary slowest time of the year. Demand is at 3,179 pending sales and as long as there are homes coming on the market, buyers will continue to trip over themselves to become the winning bidder. Buyers know that now is a good time to buy. Driven by great interest rates and knowledge that the housing market is becoming more and more attractive every week that goes by, demand will remain strong well into 2013. Housing is back and a full recovery is well underway.
Distressed Market Update:
The distressed market has dropped, unabated since the end of October last year, when it totaled 3,563. It has dropped by 3,073 and now totals just 490. The distressed inventory has not been this low since May 2007. It currently represents just 13% of the total active inventory and 34% of demand. Last year it represented 37% of the inventory and 56% of demand. There is no shadow inventory waiting to make its way onto the market. There are many homeowners someplace in the system working towards a short sale, modification, or foreclosures, but the numbers are going to remain relatively similar for the next several years. The number of closed short sales and foreclosures in October of this year totaled 881 compared to 842 in October 2011. The numbers have not changed much over the last couple of years.
In the past two weeks, the foreclosure inventory increased by 14 homes, totaling 142, and has an expected market time of 22 days. The short sale inventory decreased by 56 homes in the past two weeks and now totals 348. The expected market time is only 12 days and continues to be the hottest segment of the housing market.
Huntington Beach Inventory:
According to Mr. Thomas, there are 210 active listings in Huntington Beach. Of those, approximately 10% are “distressed sales” such as short sale, bank owned, etc.
In the last 30 days, 198 homes in Huntington Beach went into escrow. Therefore, there is presently a 1.06 months supply of homes for sale. Thus, if no new listings were entered for the next 30 days, and we have the same number of homes sell as last month, there would be only 12 homes left on the market 30 days from now. In over 26 years selling real estate in Huntington Beach, I have never seen the inventory of homes for sale so low.
Thirty days ago, there was a 1.32 months supply of homes, one year ago there was a 3.32 months supply, and two years ago there was a 4.32 months supply.
Rock bottom mortgage rates and unprecedented low levels of inventory make this the best time in years to Quickly Sell a Huntington Beach home for Full Market Value.
The average price of a home listed for sale in Huntington Beach is $964,000.
For questions about buying and selling real estate in Orange County, contact Scot Campbell. He is the President of The Scot Campbell TEAM at Coldwell Banker-Campbell Realtors in Huntington Beach, CA.
He has been a licensed broker for over 21 years and has brokered over 1000 homes and just about every type of transaction imaginable.
Read his profile and client reviews at www.ScotCampbell.com
He can be reached at 714-960-0700 at the office, 714-336-0394 on his mobile number or via email at Scot.Campbell@ColdwellBanker.com