“The sellers are calling the shots this spring!” was so accurately tweeted a couple days ago by Paul Reid, our South Orange County team lead and OC marketing ambassador. This could likely be the case for all Redfin markets across the nation, but is being felt deeply here in Orange County with 75% of our offers in March being in bidding wars.
The good news? The basic principle of supply and demand is in play here. Supply and demand determine price. With inventory low and the buyers in full force, we are already seeing homes sell above asking price and even above comps in the area. If we continue to see this trend, we are likely taking the first steps towards being able to officially say we are moving away from the bottom of the market.
In the meantime much can be done for buyers to position themselves to be successful in multiple offer situations such as upgrading a pre-approval to a full underwriter approval status or reducing contingencies and increasing deposits. Redfin agents have many unique techniques that they are using to position their buyers to win at the table. The first step is to educate ourselves as to what is happening out there, so let’s take a look.
Inventory down sharply
Inventory in Orange County as a whole continued and increased the angle of its nosedive in March, dropping 17.8% from February, and down 44.9% from March 2011. Newport Beach and Newport Coast were the only two cities* in the county that bucked the trend, with monthly gains of 4.8% and 2.1% respectively. However, they were both down year over year. On the other end of the spectrum, Anaheim and Lake Forest each dropped more than 30% month over month.
At the same time, the number of sales in the county shot up to levels we haven’t seen since last June, putting a big squeeze on home buyers.
Looking forward, growth in pending sales in Orange County was almost off the charts, up 17.3% month over month and 33.1% year over year. These pending sales are an indicator that in coming months, the number of sales will also rise, putting more pressure on inventory.
Prices remain mostly stable
The price surprise was in the median condo price in Orange County, which jumped 7.2% from February and dropped 50.5% from the previous year. However, the median price for a single-family home was relatively stable, up only 1.1% for the month, to $470,000, but down 6% from $500,000 from March of last year.
In terms of month over month price increase, the big winners were Laguna Beach, with a 48% month over month increase in median single-family home price to $1.4 million, and San Clemente, with an 11.4% month over month growth rate to $685,000. Tustin and San Juan Capistrano were on the other end of the spectrum, with the median sale price falling 22.7% to $495,000 and 22.4% to $449,000 respectively.
* Of cities with more than 100 homes for sale on the last day of the month