The housing market is a lot hotter than many think and 2020 is going to line up heavily in favor of sellers.
A Warm December: With an Expected Market Time of 70 days for all of Orange County, this is the warmest December since 2017 when housing was hot.
So much can change in the course of a year. From one year to the next, professional sports teams can go from the bottom of the standings to playing in the playoffs, babies go from crawling to running, and kids go from picking up an instrument for the first time to playing in the school orchestra.
It’s not an immediate change; instead, it is a slow evolution.
That is precisely how the Orange County housing market has evolved, going from a slight Buyer’s Market last year to a slight Seller’s Market today.
December is the slowest time of the year in terms of new escrows and the number of homes that pop on the market. Both buyers and potential sellers divert their attention from housing to enjoying the holiday season. Yet, despite all of the holiday distractions, it has been a slight Seller’s Market every December since 2012 other than two years, 2014 and 2018.
Many intuitively think that because it is the slowest time of the year that housing lines up in favor of buyers; it is just not true. While it may be true that demand drops to its lowest point of the year by the end of the month, so does the active inventory. The muted demand is offset by a drop in supply.
And, this year the inventory has dropped by 40% since July, shedding 3,055 homes. Demand (last 30-days of pending sales) dropped by only 22%, 556 escrows. As a result, the Expected Market Time (the amount of time it would take from hammering in the FOR SALE sign to opening escrow) dropped from 91 days in July to 70 days in the middle of December.
Housing is actually hotter today than it was in July! What happened? How is housing hotter today than July? With mortgage rates dropping all year, the housing market slowly thawed. The thaw continued through the Autumn Market as rates reached their lowest levels of the year and remained between 3.5% and 3.75%. Demand climbed and the housing inventory dropped. That is the recipe for a Seller’s Market where housing stands today. Year over year, the differences are staggering. The active listing inventory is down by 36% compared to December 2018.