Housing Cracks

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Real Estate

In the Orange County housing market, the incredible, insanely Hot Seller’s Market will eventually evolve into something completely different, and that is beginning to take place right now.

Now that the first quarter of 2022 is in the rearview mirror, noticeable cracks have appeared that illustrate a cooling market. It is not as if housing has suddenly tilted in favor of buyers. No, multiple offers are still the norm, and most homes are flying off the market and into escrow just moments after FOR-SALE signs are pounded into the front yard. Buyers are still frustrated by the lack of available homes to purchase in all price ranges. Sellers remain in the driver’s seat able to call the shots. Nonetheless, trends have surfaced that highlight a cooling marketplace that will eventually pave the way to a completely different housing scene thanks to a dramatic rise in mortgage rates from 3.25% at the start of the year to 5.25% today (Mortgage News Daily).

From January 20th through today, the number of available homes to purchase has risen from 1,080 to 1,732, up an astonishing 60%, or 652 additional homes. The inventory has struggled to grow since 2020, the start of the pandemic. It is the largest gain since 2019. Today’s level is still extremely anemic and far below normal levels, yet is a trend that demonstrates that not all homes are selling instantly. A staggering 15% of all available homes to purchase today reduced their asking price. This phenomenon is indicative of a market where buyers are quickly becoming less interested in overpriced homes. Many sellers are arbitrarily pricing and stretching the asking price in anticipation of selling for much higher than the most recent pending or comparable sell. While this strategy may have worked over the past couple of years, buyers will become less willing to stretch in price as the year progresses. Many sellers will have to reduce their asking price to find success, and, in many cases, more than once.

While there are definite cracks in Orange County’s pandemic induced housing run, the market is still an insanely Hot Seller’s market. Due to an unprecedented spike in mortgage rates, new trends are emerging fast. These trends should be seen as cautionary flags in approaching the local housing market. Careful pricing is rapidly becoming an essential ingredient to successfully selling.

I recently took a listing on a home with a brand new, beautiful kitchen remodel featuring a cooktop and separate opening for a built-in stove as opposed to the original freestanding combo stove/oven. The contractor who my client hired had skipped out on her leaving her with an empty oven hole in her cabinets. She was anxious to list the property with the intention of selling her home without an oven (cooktop only) and just disclose to the buyer a future oven easily be installed. This idea definitely could have worked, however, I was determined to ensure she received top dollar as opposed to allowing a $1,500 oven get in the way. This led my team and I to hunt high and low for not just any oven but an oven unique in size and one that operated off a 110v. Two days later the oven was ordered with installation only two business days later. Installation day came and for many reasons the oven install project came a screeching halt; immediately becoming a larger project than it should have due to negligent work by the previous contractor. Determined to stay on schedule and not push back our list date, I immediately reached out to my dependable team of vendors. With less than 24 hours notice, my handyman made the alterations needed the morning of the photoshoot with success! Grateful to say the least and proud to be able to meet my client’s listing expectations regardless of the obstacles encountered. I am grateful and thankful for my extended team who supports me and my clients. This is an example of my daily determination and hands-on service that strive to provide to my clients.

Before selling your home, consider these value-add renovations.

  • Garage door replacement. Average cost: $3,907. Cost recouped: 93.8%
  • Minor kitchen remodel. Average cost: $26,214. Cost recouped: 72.2%
  • Fiber-cement siding. Average cost: $19,626. Cost recouped: 69.4%
  • Vinyl windows. Average cost: $19,385. Cost recouped: 68.6%

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