At OC180NEWS we publish three exclusive regular real estate reports: A micro level mid-month inventory/distressed property report, a micro level month end home sales report, and every two weeks, our macro view of supply/demand in the Orange County real estate market. Earlier this week, we finished our monthly home sales reports for January transactions. In this report, we provide our biweekly macro level review of Orange County’s real estate market – together, these reports present a tale of two markets.
As we indicated in our final installment on January home sales, see related articles below, we were struck by the unusual consistency of the numbers across the four West Orange County markets – Seal Beach, Leisure World, Los Alamitos, and Rossmoor. All of the home price measurements we track indicated significant price decreases in January. The lower prices were evident in both total price, and prices per square foot. Further, the price declines occurred both in comparison to the previous month, and one year earlier. There is just no other way to interpret that data – home prices in West OC fell in January 2012.
Both our mid-month inventory/distressed property reports, and our monthly home sales reports are considered micro level views because we limit the analysis to only West OC, all the numbers are built up from individual local transactions, and we report data on individual home sales.
For contrast, our bi-monthly countywide supply/demand reports are macro because we look at the county in total. At this moment, the macro level view and the micro perspective could not be more different. The micro January home sales reports were all negative, but the newly released macro data is just the opposite – positive in every measure.
The data in this report is as of February 2, 2012. The number of homes on the market in Orange County decreased from 8,080 two weeks earlier, to 7,823 on February 2, a decrease of 3.1%. One year ago, the inventory was much higher, and going up. Last year at this time there were 10,389 Orange County homes on the market, 1.6% higher than the previous two weeks.
Just as the number of homes for sale was going down, the demand chasing those houses was experiencing an expansion typical of this time of year. Demand, measured by the number of new sales contracts during the last 30 days, increased to 3,134 units, a 24% increase in two weeks. Last year demand was at 2,718, up 26.2% for the two weeks. In 2010, demand, at 3,248 units, was just slightly higher than the current level.
As is very typical for this time of year, demand picks up faster than new homes coming on the market. Thus, the ratio between homes offered for sale and the demand for those homes decreases substantially from mid-January, to early February. The ratio fell from 3.20 homes on the market for every new sale, two weeks ago, to 2.5 as of February 2, 2012.
At this time last year, with many more homes on the market and lower demand, there were 3.82 homes for sale for every new sales contract. But, the current numbers are nearly identical to two years ago. Two years ago there were 7,857 homes for sale in OC (7,823 today) and demand was 3,248 (3,134 today), making the ratio of homes offered/sales 2.42 (2.50 today).
As strong as the demand/supply relationship is, the best news for OC homeowners is yet to come. The drag on the market ever since the Great Recession began has been the number of distressed homes on the market. At OC180NEWS we track that most important statistic over the long term. The trend has been a steady, yet gentle reduction which began in January 2011. At that time, there were 4,123 distressed homes on the market in OC.
Once again, the number of distressed homes on the market in OC decreased. This time it fell from 2,990 two weeks earlier, to 2,691 in the most recent data. That’s the lowest level of listed distressed properties since exactly two years ago when it was 2,651.
In January 2011, when demand was at its lowest and listed distressed properties at their highest, distressed homes were 210% of demand. Today, dipping below 100% for the first time since June 2010, distressed homes are only 86% of demand.
If the macro countywide supply/demand relationship and the steady decrease in distressed properties develop in West OC, the January 2012 price decreases experienced in our local market should be temporary. The tale of two markets should become dominated by the tale of the macro market. But, real estate is very local and any buying or selling decisions should be based on circumstances of specific neighborhoods. This article series is intended to provide information about macro countywide real estate trends in supply and demand.
All real estate data in this article is from a report provided by ReportsOnHousing.com. The analysis and text are by OC180NEWS.
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About Dolores Barr, Publisher
Dolores Barr has lived in Rossmoor since 1992 and has created this site to provide local news for the people of Los Alamitos, Seal Beach, Rossmoor, Leisure World, Sunset Beach, and Surfside, California. My husband and I have had two students graduate from the Los Alamitos Unified School District and currently our Grandson, Ricky Apodaca, grade 3 at Weaver Elementary, is actively involved in youth baseball through LAYB and youth football through FNL.
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