Welcome Back to our March 2018 Huntington Beach Real Estate Market Report and Orange County Real Estate Market Report . March is usually the start to our Spring Selling Season which means more homes coming on the market but this year seems to be moving a bit slower than years past with inventory trickling on the market and homes going right into escrow shortly after. Are we in a bubble? How can prices continue to go up when they are already so high? Where does the market go from here? These are some of the questions I over hear when sitting at the local Starbucks or when talking to new buyers for the first time. Let’s take a minute to go over these questions along with my predictions on our current market.
Current inventory levels are near the lowest levels in nearly a decade with only 226 active homes on the market in Huntington Beach and around 4,400 in Orange County as a whole. I understand that these numbers don’t mean a lot to most people but what they tell us as Professional Realtors is that the supply of homes is way below where it needs to be to change the market in favor of Buyers. A balanced market, one which doesn’t favor buyers or sellers, generally happens in Orange County when the supply of homes stabilizes around 8,000 home for sale. That would mean that we would need to nearly double our current inventory and stay there for a while to change the market sentiment.
I want to go over 8 of the top reasons why we aren’t in a bubble and Buyers and Sellers can expect more of the same for the foreseeable future.
- Over the past 8 years, borrowers have had to qualify with good income and credit and have down payments. The crazy loans that caused the crash are gone.
- Owners have not extracted equity as in past booms in the 1980s and 2000s. Homes were treated like second incomes then, but not now. The owners of homes are sitting on the largest pile of equity in history resulting in a massive cushion in the event of a recession.
- The vast majority of loans placed in the last 6 years are at incredibly affordable 3-4% fixed rates.
- A higher than normal percentage of homes have been purchased with cash.
- A higher than normal percentage of homes have been purchased by investors.
- A single-family building boom never occurred in Orange County during this cycle. There’s no chance of a glut of new homes being coming to market as there is very little land left to build on in the county.
- There are no crazy loan programs. People who want to borrow tomorrow will have to qualify with good credit, stable income and a down payment.
- We just came off the worst downturn in real estate and survived. In the next downturn, the programs created to help homeowners in trouble in the last downturn will be implemented immediately instead of waiting for several years since there’s nothing new the government and lenders have to create. As a result, fewer will lose their homes causing downward pressure on prices.
Bottom line is that our current market is built on basic supply and demand. When you have very few of something and a lot of people want it, prices will increase. That is exactly what has happened with our current market. In my opinion, those that are claiming a real estate bubble are the same ones that have been waiting on the sidelines since 2012 to purchase waiting for a pullback while the market has gone up nearly 100%.
With that being said, it will remain a Sellers market for the foreseeable future with homes moving quickly from Active to Pending when priced according to fair market value. The lack of available homes for sale coupled with high buyer demand means that Orange County will likely see another 3-5% appreciation over the next year .
As you know, all Real Estate is local, so if you are a Buyer, Seller or Investor in Today’s market and you have questions, I would love the opportunity to help guide you in the right direction. If you would like more information about me, please go to my website www.jebsmith.net or check out my other videos on Facebook and YouTube. As always, I appreciate you taking the time to watch and I look forward to seeing you again next month. Make it a great day.