Orange County Housing Market Showing No Sign of Slowing Down
Ron Garafalo | September 19, 2018
As the summer of 2018 comes to an end, the real estate market in Orange County is not showing any signs of slowing down. After the highs Orange County experienced in 2008, when the median sales price (half above and half below) for all homes was $300,000, we saw prices decrease for about eight years, to a low of $212,500 in early 2016. Since that time the median sales price has increased consistently to its current $250,000.
There are several reasons for this increase. One obvious reason is the economy. With low unemployment, the stock market at record highs and wages increasing, many are in a better position financially to purchase a home, while at the same time more confident about the future.
Another factor is that the number of homes for sale has decreased significantly in the last three years. In August of 2015 there were 3,035 homes for sale. At the end of August 2018, there were only 1,921. Add to that the number of homes sold during that time, and it is easy to see why prices are going up. In August of 2015 we were on track to sell 2,905 homes for the year, and in 2018 that number has increased to 4,349.
As demand increases and supply decreases, the result is of course, prices increase. At the same time, the month’s supply of inventory has gone down. In August of 2015 it was 13.6 months, and it is currently 5.3 months. During that time, days on market has decreased from 97 to 63 days. All these signs are indicative of a seller’s market. Currently, sellers are getting about 98% of their list price and many homes are being sold over list price.
This makes it very difficult on the buyer side. It is very frustrating to be one of several or many offers on a home you want to buy. I have an agent in my office that had a listing that received more than 30 offers in the first week on the market. That is an extreme, but this past weekend a buyer of an agent I spoke to saw a home priced at $399,000 that was listed less than a week attract 17 offers. Of course, this is not always the case, but the fact that is happens on a somewhat consistent basis reflects just how busy the real estate market is in Orange County.
What can change the market that we are in at this time? One thing is inventory. If our inventory increased, it would give buyers more options when looking for a home. New construction is one way to increase inventory. Another very big factor, in my opinion, is interest rates. Interest rates have risen in the last year, and from all that I read, they are going to continue to rise. As rates rise, buying a home becomes more expensive. I believe that is another reason so many buyers are looking to buy now. They want to purchase before rates go up even more. Also, if rates increase, a certain percentage of buyers may not be able to purchase, thereby decreasing demand, which would also put pressure on price increases.
As a Realtor for almost 20 years, I strongly believe in the value Realtors bring whether you are buying or selling a home. In what is most likely the biggest financial decision most of us face, working with a professional to navigate the detailed process is very important. As Realtors, we pledge to follow our Code of Ethics, which means that not only are we educated in what we do, but we pledge to do our job in an ethical manner. In our profession, we have pledged to follow the Realtor Code of Ethics for more than 100 years. That is a very powerful statement. In today’s market, which is one that is very competitive, it is even more important that buyers and sellers have an agent working with them.
The seasons will change as will the real estate market. Whatever your real estate need is, talking to a real estate professional is always a very intelligent decision.
Ron Garafalo is 2019 President of the Hudson Gateway Association of Realtors, Inc