What is going on in the housing market?
The housing market is rather simple to look at. There are a few things to look at to see what is going on...
There are so many people saying that when rates go up, prices come down. Which sounds great, but it's just not true. At least not with where we're at right now.
Let's review the Orange County housing market by looking at these three things...
First, let's talk about the supply. Supply, or inventory, is the number of active listings in a market. In the chart below, you'll see that we're close to record low inventory levels. The beginning of the chart is from 2008, and the end of the chart is today.
So it's very clear that supply is REALLY low in comparison to a normal market, which you could see from 2012 - 2020.
Next is demand. Demand is determined by the number of buyers putting homes under contract. We look at that by measuring the number of homes that are 'Under Contract' or 'Pending'.
Looking at this chart, you can also see that demand is lower than it's been in a long time. Two things drive this. Low supply, meaning fewer homes available to buy and higher interest rates.
It should be no surprise that when rates went from 3% to 7% that demand fell off dramatically. What was a surprise to a lot was that supply (inventory) didn't also jump alongside rates.
There are two major causes to so few people choosing to list their homes for sale.
1. Higher interest rates than they currently have.
- Meaning homeowners don't want to give up their sub 4% interest rate on their current home.
- Having such a low 30 year fixed interest rate turns into an asset.
2. There are so few homes to choose from, making it difficult to find a new place to live.
- Also paired with a competitive housing market, those that need to sell before they buy have a hard time. If you're in this position and you haven't heard about our Buy Before you Sell program, click here
Now to go over what everyone is asking about. What is happening with pricing? Last month, we had one of largest price increases in the last three years. Last year, about this time, we had prices hit a peak.
For everyone saying that housing prices are crashing or going to crash because of interest rates, we've been over 6% rates for over a year now. Prices dropped, and some took advantage last winter. Now that inventory has stayed low and demand has stayed flat, prices are continuing to increase.
Homeowners, your home value will continue to stay steady and likely will increase. If you're thinking about buying another property, you may want to think about doing that sooner than later.
Prospective home buyers... We talk to a lot of people in your shoes and we're hearing two major objections when it comes to buying now or waiting.
1. I'm waiting for rates to come down
2. I'm waiting for the market to crash
For those that are waiting for rates to come down. Be ready for a hyper competitive market, just like we saw from 2020 - 2021.
For those waiting for the market to crash, I'm curious what you feel is going to cause supply to dramatically increase.
Sellers, you're in an incredible position to make that move that has been so difficult for the last 3 years. Buying and selling at the same time. Now, is the time to make that happen. Message us to see if you can buy before you sell.
As always, if you'd like to see how this affects your unique situation. Reach out and connect with one of our local experts. Either reply to this message or visit our site at SoCalHomesForSale.com