The residential housing market has been at an unrelentingly insane pace since July 2020, and it seems like nothing will slow it down.
Interest Rates are Juicing the Market
Unless you've been living under a rock, by now you know that our local Irvine real estate market is going absolutely bananas. We know that we’re currently in an aggressive sellers market, and the numbers from the past couple months this year compared to those of last year prove it.
Historically low rates have led to the Expected Market Time dropping to 23 days, the lowest level for this time of year since tracking began in 2004.
For buyers waiting for the market to slow and turn more favorably towards the home shopper, there seems to be no light at the end of tunnel.
Housing has been lining up in favor of sellers since 2012. Many thought that the pandemic would slow housing, create a deep recession, and erode home values, giving buyers that much desired edge. Instead, rates plummeted to record lows, demand escalated, the inventory of homes available plummeted to unfathomable depths, and home values soared to unbelievable heights.
The pandemic led economic recession lasted only two months, and it did not touch the Orange County housing industry, and certainly not Irvine's housing industry!
Values have climbed more than 20% year-over-year and the pace of Orange County housing has not slowed much at all this year. The Expected Market Time (the amount of time between hammering in the FOR-SALE sign and opening escrow) is not measured in months any more - it is measured in days, and often in hours!
A Hot Seller’s Market is defined as a market time below 60-days, the lower the level, the hotter the market. Today, Irvine sellers cannot keep their homes on the shelf - they go almost immediately.
Interest rates although still super-low, are rising. As rates rise further, many buyers will put their home-buying plans on hold because as monthly mortgage payments rise, affordability diminishes. As a result, the inventory will rise with fewer buyers in the marketplace, and the Expected Market Time will rise too.
The market will transition first to a Slight Seller’s Market, between 60 and 90 days of inventory, then to a Balanced Market, between 90 and 120 days, next to a Slight Buyer’s Market, between 120 and 150 days, and finally, to a Deep Buyer’s Market, greater than 150 days.
Active, (for sale), inventory dropped 9% in the past two weeks and today there are only 85 homes listed for sale in the whole of Irvine.
The prices of Irvine active listings range from $448,000 to $49,950,000!, (for a 7-bedroom, 12-bath Shady Canyon estate).
A lot of people who are considering selling their home but don’t want to deal with the pressure of buying in this market, what with prices going up, are holding off on selling - for the fear of being homeless or hoping to exit at the top of the market. Who knows when the to of the market will be here?!
Even in this crazy market you need a plan. Let's structure your plan together.
Whether it’s making an offer on a home, or figuring a list price for your present home, it’s important to understand what’s really going on and what the data is showing us.
My team and I are always here to answer any questions. If you or someone you know plans to buy or sell in the next 12 months or so, give me a call, shoot me an email or text, and let’s chat.