OC sees best housing market since boom

April 3rd, 2012,  by 

OC Register

Orange County is seeing its best housing market since the final days of the housing boom in 2005, with the number of homes for sale at their lowest level in nearly seven years and the number of sales contracts in progress at their second highest level, a new housing report shows.

The only month to see more deals reached than March was in April 2010 – when buyers rushed to meet the deadline for the first-time homebuyers tax credit.

The latest figures surfaced in this week’s report from O.C. broker Steve Thomas ofReportsOnHousing.com. The numbers — based on pending deals — give a preview of closed-sale data expected in future months.

Specifically, Thomas’ figures show:

  • The number of homes listed for sale totaled 6,615 in the 30 days ending last Thursday. That’s the smallest housing market since July 2005. Inventory is down 38% from 2011. And it’s down 63% from the peak in September 2007, when 17,898 homes were listed for sale in Orange County.
  • The number of pending sales – homes going into escrow in the latest 30-day period – was 3,840, the second-highest number since the end of June 2005. Only April 2010’s tally of 3,979 deals reached was higher.
  • The “market time,” or time it would take to sell all 6,615 listings that the current sales pace, fell to 52 days. That’s the shortest market time since August 2005.

“As this scenario drags on, it will only be a matter of time before prices star to really rise again,” Thomas said.

While sales demand is up and the supply of homes for sale is down, Thomas is quick to point out that it’s still a different market than in 2005 — the final year before home sales tanked and triggered the first dominos in the cascading, three-year collapse that ate the global economy.

Thomas noted that the types of homes now selling and the prices at which they’re selling is very different than in the boom, with the hottest demand for homes selling at $750,000 and below, and very little demand for homes in the $1.5 million range and above.

“We’re still digesting and absorbing short sales,” he said, referring to homes selling for less than is owed on their mortgages.

Still, he said: “If you’re a buyer stepping into the market, it feels just like ’04 and ’05. … It’s still a crazy market.”

For example, agents are canceling appointments with buyers because there aren’t enough homes to show them.

Thomas noted also that a neighbor in Ladera Ranch got two offers on his home before his agent could put a lock box on the door.

“Agents are clamoring to get their buyers into a home,” he said.

So where have all the homes for sale gone?

Thomas found that the biggest decline is in the number of short sales on the market. They’ve come down 25% from the same period last year.

It’s hard to tell why. Thomas speculated that there are more loan modifications that are being made, so homeowners can afford their loans and avoid short sales. There are some promising signs that the overall economy is improving as well.

But all types of homes have come off the market, not just short sales.

For example, bank-owned home listings fell 11% last month, and listings of traditional, non-distressed homeowner sales – also called “equity sales” – decreased s for sale dropped 12%.

And supply isn’t just down in Orange County.

“It is down significantly across Southern California,” Thomas said.

Thomas said that the market could change dramatically if homeowners suddenly see an opportunity to sell and put their homes on the market.

“That could be the monkey wrench in this thing,” he said.
Here’s the recent data, as of last Thursday for listings; deals pending; market time in months; last Thursday vs. 2 weeks ago, a year ago and 2 years ago (Note: k=thousand; m=million) …

Slice Listings Deals Time (month) 2 week ago 1 yr. ago 2 yr. ago
$0-$250k 1,101 784 1.40 1.50 2.67 1.75
$250k-$500k 2,061 1,788 1.15 1.30 2.59 1.62
$500k-$750k 1,311 776 1.69 1.87 3.21 2.54
$750k-$1m 708 260 2.72 3.01 3.85 3.60
$1m-$1.5m 506 144 3.51 3.41 6.44 6.62
$1.5m-$2m 304 52 5.85 7.00 6.19 7.71
$2m-4m 411 47 8.74 9.50 10.25 12.04
$4m+ 255 5 51.00 35.29 31.44 41.13
All O.C. 6,615 3,840 1.72 1.86 3.20 2.46

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