by Huntington Beach Realtor – Scot Campbell – 4/28/13 – Source: Reports On Housing
Demand for homes priced above $750,000 is the highest in 7 years, demand is up 30%
Quietly, and with very little fanfare, the upper ranges have improved dramatically. To this point, all of the emphasis has been on the lower ranges, below $750,000. It is no wonder; cumulatively, the expected market time for the lower range is just three weeks. Multiple offers, sales prices above their list price, and a lot of unhappy buyers characterize this price range.
Even with a much tighter inventory, the upper ranges, homes priced above $750,000, have staged quite a comeback.
Demand is up 30% compared to last year. The limited supply has really affected the lower ranges where demand is down 30%.
Not in the luxury end. The expected market time has plunged from 4 months to less than 2.5 months, a solid seller’s market.
The ultra-high luxury end, homes priced above $2 million, has encountered the strongest improvement.
Demand for homes priced from $2 million to $4 million has increased by 52% and their expected market time has dropped from nearly 11 months down to 6 months. Demand for homes priced over $4 million has increased by nearly two-and-a-half times and their expected market time has dropped from 35 months to 10.5 months. It has gone from a deep freeze to a thaw.
2013 headlines have so far been about the lack of inventory, incredible demand, appreciation, and a return to a crazy market for buyers. Let’s not forget the upper ranges. They too have been staging their own comeback with a narrowing of the inventory, increased demand, and the return of appreciation. Granted it is not as crazy as the lower ranges, but buyers better be cautious, there is definite competition, especially if the price is right.
The active inventory has increased by 11% in the past month.
Despite homes flying off the market as fast as their for sale signs are pushed into the ground, the active listing inventory is still managing to grow.
In the past month, the inventory has added 348 homes, an 11% increase, and now sits at 3,556, levels not seen since November of last year.
For homes below $750,000, the inventory has increased by 9% in a month. But, for homes priced above $750,000, the upper end, the increase has been an astonishing 19%. The largest increase can be found in homes priced between $1 million to $1.5 million, blossoming by 50%.
Keep in mind, the active listing inventory continuously dropped, unabated, from June 2011 until the beginning of this year. The inventory has not increased like it did in the past month since April 2011. This marks a definitive shift in the Orange County marketplace.
How can the active inventory increase despite feverish demand? The word in the real estate trenches is that many homes are being sold at the highest levels in years and are procuring offers at way over their asking prices. But, there are also reports of homes that are priced at absurd levels that match what homes fetched back in the heydays of mid-2000.
In most areas of Orange County, buyers have illustrated that they are willing to pay above the most recent comparable or pending sale in order to be the winning bidder on a home. However, if homes are priced grossly out of bounds, buyers will not pursue them. They are not going to bite. Instead, these homes will remain on the market until the homeowners reduce the price or until the market sufficiently increases.
Some sellers are arbitrarily pricing their homes, seemingly pulling listed values out of the thin air versus relying on local market data and trends.
These sellers must come to the quick realization that even with prices escalating, buyers are still price conscious and will not pursue a ridiculously overpriced home.
Last year at this time, the active listing inventory was at 6,044 homes, 2,488 more than today. The year over year gap has narrowed because the inventory was continuously dropping last year. The difference was 3,407 homes just one month ago
So, where do we go from here? With more and more homeowners catching wind of the major increase in values within their neighborhoods, a larger number will be coaxed into placing their homes on the market as well… Many will overprice their homes.
This summer we will most likely see a wave of these sellers hit the market at the same time and the inventories will blossom. Buyers will in turn slow their rush to purchase, marking an additional shift in the market.
With more homes finally coming on the market, demand increased by 7% in the past two weeks.
In the past two weeks, demand, the number of new pending sales over the past month, increased by 215 and now totals 3,108, the highest level since November of last year. There are 884 fewer pending sales compared to last year’s demand.
Although demand is far less compared to last year, a significant drop in short sales so far this year is a major difference. Short sales take a lot longer to close, if they close at all. Instead, many more homeowners with equity in their homes have opted to sell. The main difference between a short sale and an equity seller, is that the equity seller can close now.
Compared to last year, sellers with equity are up 23% and now account for 84% of demand. They made up 58% of demand last year.
2013 has quickly become the year of the equity seller.
For questions about buying and selling real estate in Huntington Beach and Coastal 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 22 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