housing inventory – OC Neighborhoods

Inflation: The Affect It May Have on Home Buyers

In February 2022, inflation accelerated to a shocking 7.9 percent, the highest it has ever been since the Presidency of Ronald Reagan. Many disagree with the 7.9 rate of inflation and believe it is easily in the double digits. If the price of consumer products stays on its path of rising, interest rates for home loans will inevitably escalate as well.

The rarity back in January were the low mortgage rates and soaring inflation. Since November 2021, the inflation rate was 6.9 percent so it has only gotten worse. As a result mortgage rates have skyrocketed to all the way up to 5% from numerous reports.

Moreover, the Federal Reserve is reducing its holdings of mortgage-backed bonds which is also influencing interest rates upward. Given this, homeowners and buyers have to plan accordingly for a higher payment. Some borrowers are considering short-term fixed ARMs to obtain a low affordable payment.

The Dangers of Inflation

Looking back it was obviously a mistake on the part of the Federal Reserve to label the inflation as “transitory” and not act sooner to end the rapid increases. The country and the world overall were in a stage of deflation from March 2020 through the end of the year.

The federal government wanted to give people’s bank accounts some stimulus money since many were forced to not work. However, this misstep actually encouraged price increases and irresponsible consumer spending as soon as typical lifestyle spending returned.

Year over year inflation statistics do a comparison of prices from the prior year. All this tells you is that consumers are spending much more than a year ago for the same items or services. The transitory argument claims things will return to normal the moment people have spent all they can.

Sad to say, that is not the case or what is taking place. Due to the fact that there are still substantial shortages for appliances, building materials, automobiles, and even common grocery items the Fed quit describing inflation as temporary.

The benefit used to be lower interest rates and inflation but that has changed for the worse too. Real estate studies are showing the mortgage payment today is now 20 percent more than one year ago

Interest Rates

The Federal Reserve has already said it will raise interest rates in 2022 likely 4 to 7 times. Their first raise was at the March 16th meeting with a 25 basis points hike. They have also signaled in upcoming meetings they may have to raise by 50 basis points.

Decisions About Your Home
Some of the hottest real estate markets include California, Arizona, Texas, Florida, and a few other states. With its thriving economy and optimal temperature, Arizona is a location you may want to give some thought to when choosing where your home should be. It can be a very nice place to call home assuming that you secure the right mortgage before buying a home.

Your Mortgage Leader in Arizona and Beyond!
Hopefully, with the information above, you will be able to figure out what price range, monthly payment, and down payment will be comfortable for your financial situation.

Keep in mind that you need to make wise decisions when it comes to buying a property. When you have professionals at your side who strive to make your loan application process smoother, securing a mortgage will be a breeze.

Less Bidding Wars for Orange County Home Buyers

When two or more buyers make offers on the same property it’s considered a bidding war. The seller usually accepts the highest and best offer among the multiple buyers along with terms they like as well. Over recent years this was the typical situation in Orange County depending on the price point. That’s when the housing market was unquestionably in a seller’s market and the inventory of homes was lower.

This is fantastic news for potential buyers. They no longer have to be concerned with competing against as many as 20 offers when the seller’s market was at its peak. In addition, there’s more homes for sale to pick from, and mortgage interest rates have been recently dropped. This is becoming a great time to buy a home.

The findings of a February 2019 report by Redfin reveals:

Only 13 percent of offers written by Redfin buyer’s agents were in a bidding war. That number represents a 53 percent drop from the previous year.
In every market where Redfin agents serve home values decreased.
California housing markets that had the largest percentage declines in home bidding wars were: San Francisco (-64%); Los Angeles (-57%).
One major California city is still among the most competitive and that’s San Diego; yet only one out of five offers by a Redfin agent had buyers that were involved in a multiple offer situation. That number is down by more than fifty-percent versus a year ago ¹.

Meanwhile, since January 2019 housing supply has been increasing.

According to the most recent RE/MAX National Housing Report, sales of homes have declined for six straight months and is the biggest increase in ten years.
• RE/MAX analyzed 54 different markets and it showed an average inventory rise of 6.4 percent.

On March 26th, additional evidence of home sales slowdown came out when the S&P CoreLogic Case-Shiller index showed home prices in Los Angeles and Orange counties rose 2.9% in January from a year earlier, but that was substantially lower than other months ². In Orange County, sales dropped 17.1% and prices fell 1.4% to $700,000.

What is occurring is actually quite natural according to experts. Through the past few years, home prices went up quickly until they reached a price level that many buyers became unwilling to pay the high prices. Meanwhile, interest rates were rising and topped out in November 2018. Homes started getting less and less offers and did not sell as quick.

Inventory of homes is also climbing due to buyers sensing the market is near a top, and people don’t want to buy at the peak.

What does this data mean for home buyers?
It’s actually good news if you’re shopping for a home. There is less pressure for home buyers to accept a house without their desired features such as a large kitchen, a true bedroom with a closet, two-full baths, or a two-car garage.

Market conditions are in your favor get a home soon
Many experts agree: If you qualify, make the most of today’s housing market prices and purchase a home since multiple offers are way down. Real estate is a long-term investment. So if you come across the house you want, do it now.

Then again, make sure you’re in the right financial position to take advantage. Know what’s on your credit report and make sure there’s not any errors. Get pre-approved for a mortgage prior to searching for a home. Use an experienced real estate agent to achieve your goal.

Sources:
1. Orange County market slowdown – https://www.ocregister.com/2019/03/27/market-slowdown-lingers-as-february-home-sales-drop-12-corelogic-reports/
2. SoCal Home Prices: https://www.latimes.com/business/la-fi-southern-california-home-prices-20190327-story.html

Prediction: Orange County Buyers May Have More Home Inventory in 2019

Some of the major issues on the minds of Orange County home buyers are what the real estate market in Orange County be in 2019, will the lack of homes improve, and will the competition still be fierce as the past few years?

Orange County Housing Market Could Have More Inventory in 2019
Recent forecasts suggest that home prices will keep climbing in Orange County throughout 2019, though at a slower pace than in previous years.

The prospect of rising prices is basically a continuation of the status quo. Home values in the area have been climbing steadily so for years. So it’s no surprise to see predictions calling for a continuation of that trend in 2019.

Strong housing demand has driven the entire California housing market in 2018 and into the future. A housing crash that many millenials and working poor are longing for is unlikely to happen. In fact, with the added economic activity created by housing construction and larger households, increasing price pressure remains.

But the biggest change happening within the Orange County housing market right now has to do with inventory. For the past few years, the city has experienced a severe shortage of homes for sale. That’s partly why prices have risen so fast. But a series of new reports point to significant inventory growth within the Orange County-area real estate market.

The California Association of Realtors (CAR) predicts a moderate decrease in existing single-family home sales of 3.3 percent next year to 396,800 units sold. CAR sees a slower market with homeowners hanging onto their homes. CAR believes that will subdue sales throughout 2019 along with the pressure of rising interest rates in the coming years.

Orange County’s homeownership rate peaked in 2007 at a rate of 62.7% and has decreased ever since. The most recent homeownership data reports a 56.7% homeownership rate in Orange County. (source: First Tuesday).

Real estate data provider CoreLogic reported that August home sales were down from year-ago levels in all six Southern California counties. Orange County, the region’s most expensive housing market, had the largest decrease. Home sales transactions in were down by 10.9 percent, while San Diego County had an 8.9 percent fall and L.A. County declined by 8.5 percent.

Inventory Showing Sign of Improvement?
The inventory of listed homes increased by 91 since October 15th. Listings are taking on average 45 more days to sell. Trulia reports that inventory in Orange County increased by 20.7 percent fromQ3 of 2017.

It’s been reported that many home buyers are on the sidelines simply waiting due to yearly price increases. With a decreasing pool of buyers, sellers are reducing their asking prices. Approximately 40 percent of California home sellers lowered their asking prices in August. The average price cut for sellers was 4.3 percent.

CAR reported that twenty-nine percent of home sellers this past spring moved out of California, an increase from 19 percent in 2013. Over a third of Southern California home buyers moved to more affordable counties which translates to relocating inland, to the Inland Empire, or they’re going to other Western states such as Arizona, Nevada, and Colorado.

In 2019, people looking to buy a home in Orange County should have a slightly higher inventory to choose from. That’s a positive sign towards the goal of a balanced market. However, overall the housing market will continue to have above average demand for the foreseeable future.

Home Prices Still Rising But Slower
Recent forecasts for home prices in Orange County for 2019 indicate that home prices will continue climbing over the coming months. The same goes for California as a whole.

Related: Orange County vs. Los Angeles home prices
Disclaimer: This article contains data and forecasts provided by third parties outside of our company. Housing and economic forecasts should be regarded as predictions, not a sure thing. Information provided is deemed reliable but not guaranteed.

Increasing Numbers of Homeowners Are Thinking of Selling

There are Encouraging Signs That More Homes May Be For Sale.

The era of low housing inventory could be shifting based on a recent home survey by the National Association of Realtors. The survey discovered that 80 percent of homeowners feel now is a great time to sell.

The days of tight housing inventory could be a blessing for many in Southern California where competition is fierce. Additional research can be found in Fannie Mae’s most recent Home Purchase Sentiment Index, increased by 1.2 points in August to a measurement of 88. The net result is a rise of 21 percentage points in 12 months of those homeowners who are seriously consider putting their home up for sale.

costa mesa street — Harbor Blvd Costa Mesa, source: Wikipedia

Invisible Inventory
The inventory for housing in Orange County has had low inventory and bidding has been super competitive for months. Home builders are trying to pick up the slack but another leading factor has been hesitant-to-sell homeowners.

As location and job growth continue to boost housing prices in Southern California, many owners just aren’t ready to put their homes on the Orange County MLS and then take their chances in the competitive bidding wars for their next home.

Local economic forecasters don’t anticipate a full housing recovery until the years 2019-2021. At that time, yearly sales volume should be close to 46,000 in Orange County supported by a strong local job market along with Baby Boomers retiring in large numbers, selling and typically purchasing smaller and low maintenance homes. Perhaps some will move out of state based on national surveys and more inventory in nearby states.

With approximately 80-percent of homeowners claiming now is a good time to sell their home, it can the optimal time to sell. It was only a year ago that 67 percent of homeowners felt that way. You don’t want to be selling when everyone is because that will drive down prices. So, listing your home for sale now actually could be a good time to sell.

First-time Home Buyers
A survey by NAR also discovered another positive sign: an increasing number of renters are confident about purchasing a home. As much as 62 percent of current renters believe now is a good time to be a homeowner. This is a 12 percent leap from the previous quarter. Locally in Orange County, the numbers may be less due to the higher home prices. However, condos and townhomes are great entry-level options for first time home buyers.

Many renters are motivated to buy due to having a more stable income and if their rent increases.