The market for homes in Orange County, California, finally seems to be waking up from a long slumber. While the closings for May didn’t set any records, the new pending escrows have improved substantially in the last month.
When evaluating the overall market in Orange County, I look at all cities, and residential (not multi-unit complexes or mobile homes) properties priced from a low of $75,000 to a high of $1.5 million. The $75K lower limit eliminates the erroneous leases, time shares and mobile homes. The $1.5million upper limit is to keep the mansions and estates from effecting the average $ per square foot values.
Here’s the snapshot of that market today (in units):
Active : 13,182
In Escrow : 3,908
Closed during May : 1,886
Assuming an average escrow time of 6 weeks, if that same pace continues, the absorption rate is now a little less than 4 months.
Of course, the activity level is not spread evenly over the entire market. I like to carve it up and take a look at the troubled homes separately from the ones that just need a seller to agree to a price and close date.
The foreclosed market (“REOs” or “Bank Owned”) is moving especially quickly now. Many banks are now pricing aggressively right from the start, so we are seeing multiple offers again!
Active : 966
In Escrow : 886
Closed in May : 357
The absorption rate for REOs is currently less than 2 months!
Short sales continue to be a drag on the market. The MLS rules require that listing agents put the house in the “back-up” category when offers are submitted to the bank, but there is no way of knowing when a decision will be made to either go forward or cancel the sale. Many buyers find a different property and just buy it before getting an answer from the lender so the true “in escrow” number for short sales is highly suspicious!
Active : 4387
In escrow : 935
Sold in May : 240
The absorption rate for Short sales is impossible to estimate!
For many buyers who don’t have the money or time to invest in repairs & upgrades, REOs are too much trouble. For buyers who need an answer about where they are going to live, short sales are close to impossible. If you remove both REOs and short sales from the market, we now have the following statistics:
Active : 7812
In escrow : 2091
Sold in May : 1287
The overall non-troubled market inventory is just about 5 months today, but many price ranges are very limited and the inventory level is substantially lower.
There are a lot of qualified buyers that are actively seeking a home, but they are very conservative. These buyers are the ones who sat in the corner, paying their bills, and did not get caught up in the buying frenzy of 2004 -2006. They are not going to pay those inflated prices today.
Note to sellers – if you put your home on the market today, it shouldn’t take long to determine if it is priced properly or not. If you don’t get showings quickly in this market, you are priced too high. If you get showings but no offers, talk to your agent about how it shows – it may need to be decluttered or staged, or you may have to take another look at the price!