Orange County Housing Report: Top 10 OC Housing Trends

Read this artical from Altera Real Estate Group. Really interesting. Check it out!

Even though the kids have gone back to school, the Orange County housingmarket has not really changed much over the course of the past severalweeks. It is a good time to take a look at the broader market and pinpointthe latest trends. Here's a breakdown of the top 10 current Orange Countyhousing market trends (in no particular order):1. Below $750,000 is technically a seller's market with an expected markettime of approximately two months or less. The activity below $500,000 isincredibly hot. However, this is not a conventional seller's market asvalues are not appreciating. The sheer numbers of distressed properties,mainly short sales, is keeping a lid on any appreciation. Buyers canexpect multiple offers, a tremendous amount of competition, and the need towrite offers to purchase on more than one property (often times several).2. The listing inventory has been dropping all year and is now just abovethe 8,000 mark at 8,064. We started the year at 11,842 active homes on themarket. One year ago there were 5,110 additional homes on the market andtwo years ago there was more than double today's numbers. In the lowerprice ranges there is not a lot of new inventory coming on the market.3. Cash is king and so are buyers with larger down payments. With so muchcompetition in the lower ranges, buyers with very little down are having ahard time purchasing. They are losing out to buyers that can afford largerdown payments. Many first time home buyers who are relying on the low downpayments allowed by FHA financing simply cannot compete with more qualifiedbuyers and investors. That's right. Investors are back and taking away theability for a lot of buyers to purchase.4. Foreclosures are EXTREMELY hot. There are currently only 334 activelistings that are foreclosures in all of Orange County, representing 4.1% ofthe total inventory. The expected market time for foreclosures is 0.66months, or between two and three weeks. 5. The average sale to list price ratio for foreclosures over the pastthree months is 103%. That means that, on average, foreclosures are sellingfor 3% above the list price. The sale to list price ratio for short salesand equity sellers is 98%. And, if there weren't so many appraisal issues,those numbers would be even higher. Buyers in the lower ranges should notexpect to offer that much less than the asking price.6. Prices are not dropping in the lower ranges, but they are in the upperranges above $1 million. The higher the price range, the higher theexpected market time with less and less demand. 30% of the active inventorycan be found above $1 million, yet the higher end represents only 7% ofdemand. 7. The rumors of a foreclosure moratorium have been rampant all year long.There is truth to the moratorium, but it does not look like there will be asubstantial increase in the number of foreclosures to hit the market untilthe first quarter of 2010. Also, there is a tremendous amount of pent updemand where just about every agent has pockets filled with buyers who areactively looking, but, surprisingly, there just is not a lot of freshinventory. Any increase in foreclosures will most likely be offset by pentup demand.8. With pressure from the federal government, lenders are moving more andmore towards short sales. We can expect within the coming weeks for theObama administration to announce something along these lines. Currentlymost short sales, where home owners owe more than their homes are worth,take a very long time to obtain lender approval, delaying the ultimate closeof escrow. Lenders are creating procedures to speed up the process. Shortsales are a better route than foreclosures because they are in much bettercondition and save the lenders a lot on repairing and carrying costs. Thereare currently 2,050 short sales on the market with an expected market timeof 1.58 months, much different than just one year ago when there were 4,422short sales with an expected market time of 6.2 months.9. There are currently more distressed sales within the upper ranges. Lastyear only 6.5% of all distressed properties were above $750,000. Today,11.4% of all distressed properties are above that mark. The upper rangesare not immune to distressed sales. More and more prime borrowers arehaving trouble paying their mortgages. A contributing factor to this trendis the increase in unemployment and the falling of property values wheremore and more borrowers are upside down in their homes.10. The total pending sale count , not just a snapshot of the past month(what I refer to as demand), has steadily increased by 56% over the lastyear. It is taking longer to close pending sales primarily because thereare a large number of short sales that are waiting on lender approval; thus,the count has really blossomed. There are now 6,851 total pending saleversus 4,393 one year ago.Here's a breakdown of how the numbers look this week: the active listinginventory dropped by 298 homes in the past two weeks to 8,064, its lowestlevel since January of 2006. Demand, the number of new pending deals overthe prior month, increased by 61 in the past two weeks to 3,464. Lastyear's demand was at 2,974, 490 fewer than today, and two years ago, it wasat 1,180, 2,284 fewer than today. The expected market time is currently at2.33 months, a slight change from the 2.46 month mark two weeks ago. Thenumber of distress properties on the market dropped by 132 homes in the pasttwo weeks, now totaling 2,384. 29% of the active inventory is distressedcompared to 43% last year. There are currently 2,050 short sales on theactive market, a drop of 134 over the past two weeks. The expected markettime for short sales is currently at 1.58 months.