Hello! We’ve made it. Another year in the books and this is the LAST market update for 2021! What a ride it’s been! And, there’s no surprise here but we are still dealing with massive housing constraints. Everyone (even if you haven’t been following real estate per se) has heard or knows of someone that has experienced the soaring home prices this year.
That age-old conversation or debate of “are we headed to another crash?” inevitably comes up. And, no matter how many times I explain the various differences between this market and that one, it’s still something the comes up from time to time. If you’re solely focused on prices, then you probably will wonder just how high can they go?
Here’s the thing though… this year, savvy home buyers are focused on the monthly payments. We are still experiencing historically low interest rates, currently hovering at around 3%. Think back to 2008, when they were in the 6% range, basically double or more. But, if prices are going up then doesn’t that balance itself out? The quick answer is NO. Buying power is much stronger today.
To give you an idea, in 2008, the median detached home in Orange County was around $728,000. Today, the median is around $1,120,000. Now, let’s look at mortgage payments. A $1M home with a 10% down payment at 3% interest rate would equal a mortgage payment of around $,3850/month. At 6%, that same scenario would equate to a mortgage payment of $5,500 per month. That’s a big difference, don’t you agree?
So, how are things holding up in Orange County, specifically? Well, active listings are down 6% for the county, now resting at the lowest level since 2004! We expect the inventory to continue to drop drastically throughout the remainder of the year and into the New Year. Last year, the inventory was 131% higher. And that was 2020 (post-COVID). Pre- COVID, it was 266% higher!
There are only 876 detached homes and 487 attached homes available in all of Orange County. The median price for a detached home sits at $1.6M and $590k for attached. The average days on market is 21, up 1 day from two weeks ago and down 17 days from this time last year.
So, what does this all mean for you? If you have been thinking about selling, nothing much has changed for you. While there are less buyers out there searching, you’re still in a position to take advantage of the incredible demand. If properly priced and marketed, you can set the terms for showings, negotiations, and even possession. If you are thinking about buying, now is the time to take advantage of the lower competition. Inventory is expected to remain anemic next year and with that, interest rates are expected to rise. We already see they are higher today than they were earlier this year by about a half a percent. Properly planning and having a strong strategy in place will be the difference in achieving your selling and buying goals.