SUMMER OF 2023

by Doug Echelberger

It’s time for a year over year check in for Talega to see how our market compares to last year. This time last year we had closed 81 transactions with the average price sitting at $1,794,000. The average size home was 3,066 SF and the average price per square foot was $588. On average, it took about 11 days for a home to go under contract after being listed.

This year to date, 58 homes have closed escrow and the average sales price is $1,796,000. The average size home is 2,999 SF and the average price per square foot is $582. Homes in Talega are currently spending an average of 31 days on the market before going under contract.

Overall, home values have changed very little year over year. Values have been consistent because of the lack of inventory, not only in Talega but across the US. However, these days it is taking three times as long to get a home under contract. The takeaway from these numbers is that demand is very low due to the migration slowdown and higher interest rates.

In all markets, good or bad, there are always buyers and sellers. However, in past markets where demand dropped dramatically like this the past year, active inventory ballooned. If you had to sell your home, you dropped your listing price due to mass competition to attract a buyer. With so many people sitting in their homes with mortgage rates locked in under 3.5%, few want to move and increase their payments with the new mortgage rates of 6.5-7% unless they have a real need, or they are just cashing out of the real estate market. This is resulting in very little inventory hitting the market. Currently there are only 12 Active listings in Talega, whereas in pre-pandemic years, we typically had between 45-60 homes on the market. When the market was bad back in 2008-2011, we had 100 plus homes on the market at any given month. It was not uncommon to see 2-3 real estate signs on any given street in Talega.

It is quite a change for buyers and sellers to see homes just sitting on the market these days as everyone became so conditione d to see a home sell in 3-14 days during the pandemic. They also became conditioned to multiple offers and homes selling at or over asking. The reality is that it will take longer to sell a home with fewer buyers and sellers will have to negotiate their asking price to get a home sold. The silver lining is that with fewer choices out there for buyers, prices will sustain as we have seen in the above numbers. Additionally, the more attractive homes will get all the attention and likely sell for more than last year while something less desirable or needing updating will take longer and sell for less. Buyers are placing a high value on turnkey updated properties and are discounting those that are not. I expect these trends to continue as we head into the second half of 2023.

I have sold over 900 homes in the Talega community in the last 22 years in multiple market conditions. Each market has been different, bringing various challenges and successes. Feel free to reach out if you ever have any questions regarding your home, your rental, your home value or just any general real estate questions. I am here to help and serve the community that I care so much about.

• The active listing inventory in the past couple of weeks increased by 85 homes, up 4%, and now sits at 2,281. Regardless, it is the lowest level for an end to June since tracking began in 2004. In May, 45% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,879 less. Last year, there were 3,491 homes on the market, 1,210 more homes, or 53% higher. The 3-year average before COVID (2017 to 2019) was 6,633, or 191% more, nearly triple.

• Demand, the number of pending sales over the prior month, increased by 7 pending sales in the past two weeks, nearly unchanged, and now totals 1,602, the lowest level for an end to June since tracking began in 2004. Last year, there were 1,861 pending sales, 16% more than today. The 3-year average before COVID (2017 to 2019) was 2,679, or 67% more.

• With the supply rising, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 41 to 43 days in the past couple of weeks. It was 56 days last year, slower than today and rapidly cooling as rates were rising.

• For homes priced below $750,000, the Expected Market Time increased from 28 to 29 days. This range represents 18% of the active inventory and 27% of demand.

• For homes priced between $750,000 and $1 million, the Expected Market Time increased from 27 to 28 days. This range represents 15% of the active inventory and 23% of demand.

• For homes priced between $1 million to $1.25 million, the Expected Market Time increased from 30 to 32 days. This range represents 11% of the active inventory and 14% of demand.

• For homes priced between $1.25 million to $1.5 million, the Expected Market Time decreased from 35 to 31 days. This range represents 10% of the active inventory and 13% of demand.

• For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 50 to 51 days. This range represents 13% of the active inventory and 11% of demand.

• For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 76 to 89 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 163 to 131 days. For homes priced above $6 million, the Expected Market Time increased from 274 to 435 days.

• The luxury end, all homes above $2 million, account for 34% of the inventory and 12% of demand.

• Distressed homes, both short sales and foreclosures combined, comprised only 0.3% of all listings and 0.1% of demand. Only two foreclosures and five short sales are available today in Orange County, with seven total distressed homes on the active market, down one from two weeks ago. Last year there were five distressed homes on the market, similar to today.

• There were 2,030 closed residential resales in May, 19% less than May 2022’s 2,520 closed sales. May marked a 20% rise compared to April 2023. The sales-to-list price ratio was 102.6% for all of Orange County. Foreclosures accounted for 0.25% of all closed sales, and short sales accounted for 0.05%. That means that 99.7% of all sales were good ol’ fashioned sellers with equity.

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