Orange County Housing Report: Demand Continues to Surge
Posted by Leslie Eskildsen on Tuesday, April 6th, 2010 at 7:21pm.Here's the latest Orange County Housing Report from Steven Thomas, President of Altera Real Estate.
April 1, 2010
No fooling, Orange County housing demand is picking up steam.
Call it a coincidence, but with the wet weather turning to sunshine, demand has dramatically increased. We have not seen demand this high since the beginning of July, 2009. Demand, the number of new pending sales over the prior month, increased by 352 homes over the prior two weeks and now totals 3,622, an 11% increase and the height thus far in 2010. Demand is 375 pending sales stronger than last year at this time and 1,337 stronger than two years ago.
Developing Trends: More short sales are being approved and are finally closing.
A short sale is when a seller owes more than the home is worth. When this occurs, the sale is subject to the lender, or lenders, approval. The lender approval process can take anywhere from a few weeks to several months. The vast majority take months to finally close. If there is more than one loan, short sales become much more difficult and lengthy. Ask almost any buyer or REALTOR® involved in a short sale and you will quickly find that the short sale process is both frustrating and long. They should be called “long sales.” The good news is that a record number of short sales closed last month, 611, a 60% increase year over year.
Short sales represent 26% of all sales activity. Foreclosures, on the other hand, dropped 59% year over year and only account for 15% of all activity. But, there are plenty of pending short sales that are simply not closing as they patiently wait for lender approval. With that in mind, the total pending count has reached record levels and now totals 7,150. At the beginning of the year, the total pending count was at 5,864. Thus, the total pending count has climbed by 1,286 pending sales so far in 2010. Either lenders start approving more short sales, or the total pending count is going to continue to blossom.
Active Inventory Statistics: The active inventory continues its gradual incline.
Contrary to last year when the inventory only grew by 319 by mid-March before gradually falling for the rest of the year, the active inventory has grown by 1,618 homes so far in 2010. Over the past two weeks, the inventory has increased by 135 homes. That’s the smallest increase thus far, a sign that the inventory may be leveling out. Last year the active inventory was at 11,026, 2,115 additional homes compared to today. Two years ago it was at 15,474, 6,563 additional homes. The expected market time for all of Orange County dropped from 2.68 months two weeks ago to 2.46 months today, a seller’s market. Even though it is a seller’s market, prices are not increasing that much because distressed sales are keeping a lid on appreciation.
Distressed Inventory: Not much has changed in the distressed inventory.
The number of active distressed homes on the market, all short sales and foreclosures combined, increased by 19 homes to 2,814 and now represent 31.6% of the inventory. Last year at this time, there were 4,092 distressed homes on the market, representing 37.1% of the active inventory. The number of foreclosures within the active listing inventory increased by 24 homes in the past two weeks from 394 to 418. That is not a typo; there are only 418 active foreclosures on the market. The expected market time for foreclosures is an astonishing 1.03 months, an unbelievably HOT seller’s market. The number of short sales within the active listing inventory decreased by 5 and now total 2,396. The expected market time for short sales is 1.67 months, also a HOT seller’s market.
Lower End Market vs. Upper End Market: The lower end is on FIRE, but the upper end is FROZEN.
The upper and lower ends are polar opposites. For all homes priced below $1 million, the expected market time is 2.02 months, a seller’s market. That range accounts for 77% of the active listing inventory and 95% of demand. Homes priced below $500,000 have an expected market time of less than two months, the lower the range, the crazier the market. Buyers in the lower ranges experience multiple offer situations, offers above the list price and homes that fly off the market as quickly as they come on. For homes priced above $1 million, the expected market time is at 9.26 months, a frigid buyer’s market. That range represents 23% of the active listing inventory, but only 5% of demand. Homes priced above $2 million have an expected market time in the double digits, a virtual standstill, the higher the range, the slower the market. For example, above $4 million, there are 329 active listings with demand at only 8 homes. Based upon the current pace of activity, it would take 41 months to sell all 329 homes.
Home Buyer Tax Credits: California just approved a first time home buyer tax credit of $10,000 and a new home tax credit of $10,000 as well.
With the Federal first time home buyer tax credit set to sunset after April 30th (a sale must be pending by April 30th and close by June 30th), the state of California wants to help prop up demand with a first time home buyer tax credit for transactions that close escrow on or after May 1, 2010. The $10,000 credit is spread out over three years. According to feedback from the real estate trenches, current first time home buyers in the marketplace are thrilled with this latest development.
Steven Thomas
Altera Real Estate
President
"Pride Begins at Home”
www.AlteraProperties.com
Copyright 2010 - Steven Thomas, Altera Real Estate - All Rights Reserved. This report may not be reproduced in whole or part without express written permission by author.
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Posted on Monday, April 19th, 2010 at 7:20 AM.