During recent months, there’s been various reports and data that indicate a slowing trend in the Orange County housing market. The reason is a larger supply of homes have been listed by agents and even for sale by owners. Sellers dropping their asking price is becoming more typical. The result is home prices are still increasing but at a slower rate than during the years of 2012 through 2016.
Another trend that tends to occur when this situation happens is that home sellers in Orange County are more willing to pay some or all of the buyer closing costs.
Will ‘Sellers Concessions’ Return in the Near Future?
In a real estate market where there are multiple offers or when properties are under contract quickly seller concessions or contributions are uncommon.
The housing market in Orange County has been a slow fractional decline in the last couple of years.
In a buyer’s market, eager homeowners are more amenable to cover the buyer’s closing costs for the simple fact that they want the home off their hands. Nowadays, they will consider all offers even the one with the weak financing and the contingencies included.
As the data suggests, housing demand has dropped off a bit. And while inventory is still a buzz word among agents in certain parts of Orange County, homes are remaining active (not under contract) longer today than the last couple of years (on average). Price reductions are commonplace in the Orange County housing market.
Lowering the list price is among the numerous strategies sellers utilize to improve the odds of selling their homes. Offering to put money in to help with the buyer’s closing costs is an additional solution.
The majority of mortgage programs offered to borrowers today allow sellers to contribute a specific amount of money to be applied to the buyer’s closing costs. In some cases, homeowners apply this method to bring in more offers, simply to sell their home faster.
Changes in the Orange County Housing Market
These type of seller contributions have been unheard of during the past few years, due to the fact that the market mostly favored sellers than buyers. However, there is apparently a gradual shift occurring in the Orange County housing market. It’s logical to think that a growing number of sellers will begin to contribute to the buyer’s closing costs to entice buyers, especially if the homes are not getting any offers.
A November 2018 press release from the Southern California Multiple Listing Service stated:
“A lot of sellers are sensing the change. Prolonged times to get under contract make sellers stressed about a quick sale,’ he explained. Additionally, it said, brokers are reporting some sellers’ pricing is still accommodative ‘despite a price decrease as buyers capitalize on the seller’s motivation to get their home sold.’”
Home-price appreciation is another sign that the Orange County housing market is at long last beginning to slow down. There was a period when the median home value in the area was going up by double digits annually each year. Nonetheless price growth has decreased somewhat.
As a matter of fact, a recent housing report forecasted that home values in the Orange County would rise somewhere between 1% and 2% during 2019. That’s a huge difference from the ten-percent plus price appreciation that homeowners and prospective buyers experienced through 2016 and 2017. The slowdown in price is probably due to several unique factors, such as the ability to afford for some potential home buyers.
The main takeaway is that the Orange County housing market in late 2018 is changing from two- to- three years ago. Sellers understand this aspect and are adjusting heir method of selling and marketing their home.