Orange County Housing Report: Tic… Tic… Tic…
June 17, 2018
The window of opportunity to take advantage of the Summer
Market is already beginning to close
Running Out of Time: Demand will remain elevated for only six more weeks. Summer is here! It is the season of longer days, plenty of Southern California sunshine, beckoning, sandy beaches, and refreshing dips in the pool. With summer comes all of its distractions. There are also family vacations, Disneyland, California Adventure, Knott’s Berry Farm, Magic Mountain, LEGOLAND, Raging Waters, the Discovery Science Center, Sea World, and the San Diego Zoo.
The best time of the year to sell a home, the Spring Market, is officially in the rearview mirror. It is now the Summer Market, the second best time of the year to sell a home. For some, buying a home takes a back seat to all of the family fun. Many will still purchase, but not with an extreme sense of urgency like the spring.
Sellers and real estate agents have already felt the shift in the marketplace. It actually started a few weeks ago with college graduations. Today, the sense of urgency has shifted from buyers to sellers. Sellers know that they need to open up escrow soon, or risk passing up the opportunity to sell during the Summer Market. In fact, they have six-weeks to negotiate a deal before the market slows even further.
Here is the thing. Most potential buyers prefer moving during the summer months prior to the kids going back to school. That means closing on a home and moving into it by the end of August. In order to close by the end of August, a home needs to be placed into escrow by the end of July. Typically, a home takes about a month to close after negotiating a deal and opening escrow. In looking closely at the housing cycle, demand starts to drop at the end of June. From there, it plateaus during the month of July. Finally, demand steadily drops from August 1st on.
There is something to be said about reaching August in the housing market. At that point, the end of the “school summer” is fast approaching. Buyers with school aged children start backing away from the housing market. Moving during a school year is very distracting; so, many buyers put the home buying process on hold and wait until the following year.
Sellers really need to understand that the window of opportunity is closing. Not only are there only six-weeks left before many will have missed the boat, this year is a bit more challenging than previous years. Demand is down 8% year over year. In fact, demand has not been this low in June since 2007. In addition, the active listing inventory is up 3% year over year and it is poised to continue to grow throughout the Summer Market. With an increasing supply and dropping demand, the Expected Market Time, the amount of time it takes to list a home today and then place it into escrow down the road, will continuing to grow over the course of the next six-weeks.
For sellers, it is like the tic… tic… tic… of valuable time passing by before the summer housing train leaves the station. In six-weeks, sellers will feel another noticeable shift in the housing market. In order to find success now and truly take advantage of this second best time of the year to sell a home, sellers absolutely, unequivocally MUST price their home with care. Ignore the impulse to arbitrarily price a home, stretching the asking price significantly above the most recent comparable sale. That is a recipe for disaster. Price a home $20,000 above that sale and a seller will sit with very little activity, no offers to purchase, and lose valuable market time. Instead, sellers really need to lean into the expertise of a seasoned, experienced REALTOR®. Tic... tic… tic…