As we enter the Thanksgiving/Christmas holiday season, we can be thankful for the remarkable housing recovery we have seen since the relentless and precipitous fall in property values back in 2007. Foreclosures in Orange County have declined from 16.3% a year earlier to 6.3% of existing home sales–the lowest level since May 2007 according to Data Quick.
Short sales fell from 27.2% of the resale market last year to 12.9% in October of 2013. Although we witnessed a decline in home sales during the sixteen days during the government shutdown in early October, housing sales rebounded as soon as the government reopened.
We have witnessed housing values recover to heights not seen since in 2006, and as we go forth into 2014, housing economists predict that property values will continue to rise between 7 and 9 percent beyond the 2013 price points.
The effect of the sharp rise in home prices over this year have priced many Buyers out of the market. Current sales illustrate the differences between the typical move-up range ($300,000 to $800,000) which increased 15.5% from last year and the higher priced homes (800,000+) which rose 31.9%. Investors have priced first-time home buyers out of the current market as they buy up many of the lower priced inventory to either rent or flip.
Irvine new home builders continue to expand their inventory to capture the demand that exists. The Irvine City Council is currently considering expanding upon its original plan and, will decide by the end of November 2013 to allow an additional 4,900 homes expanding the Five Points development in the Great Park beyond the initial plans in exchange for the developer to contribute $172,000,000 to build out “The Great Park”– quite a change from three years ago when there wasn’t any new home development at all in the Irvine area. The real estate market continues to exhibit the health, breadth, and vitality that is symptomatic of better things to come–albeit at a slower rate of acceleration–but still at higher prices.
With approximately 5,000 homes already scheduled to be built in the Five Points community, plus an additional 4,900 under consideration by local officials, the future of housing in Irvine is responding in a in a big way to the improved fundamentals. While most casual observers would deduce that more supply equals pressure on prices, the opposite is true in that mega builders with deep pockets build out areas with their marketing expertise and create heightened demand. In addition, builders do not cut prices. Each phase has a higher price point to get potential Buyers excited, and previous Buyers satisfied. When builders see a slow down in aggregate demand, they build at a slower pace or they add features that were previously options to sweeten the pie.
In sum, real estate prices in Irvine will be appreciating for the next eighteen to twenty-four months. The local Real Estate Market is already up 25% year-to-date in many neighborhoods which translates into over a 30% annual growth projection. What can we expect? The real estate market is strong and remains strong. Prices are stable currently. Orange County real estate prices were up over 20% year over year. Irvine real estate prices are up over 25% year over year. All twenty cities in the Case-Schiller Index were up four months in a row for the first time in eight years and the Nationwide gain was 12% year over year.
However, the Real Estate Market here in Irvine is starting to see subtle changes in the inventory this last month and has outpaced the sales. On May 2nd, there were 274 active listings in Irvine with 362 homes in escrow. On June 2nd, the active inventory increased to 353 homes available for sale in Irvine, and 349 in escrow. On July 1st there were 444 active listings in Irvine with 334 in escrow. As of August 4th, there were 531 houses available in Irvine, with 331 in escrow. As of September 30th, there were a total of 570 homes available for sale, with 268 in escrow. As of November 10th, there were 530 active listings, with 236 in escrow. The active inventory is declining slightly for seasonal reasons as well as the homes entering into escrow. We expect the trend to continue through the end of the year with not much increase in prices. However, we are optimistic that prices will start to regain momentum with the New Year.
The prices of homes entering the market are still increasing, but the speed in which they are selling has slowed down. In addition, we have seen a lowering of prices of some homes which have been on the market more than 30 days. The selling prices have surpassed 2005-2006 levels in many neighborhoods of Irvine. We expect the “new normal” to be altered slightly in these next couple of months. As we head toward the end of the year, prices should flatten as they do seasonally. The Sellers, who remain on the market, will be more motivated to sell, while their will be less aggregate demand for Buyers. Consequently, the next two months should not see as much price appreciation.
In summary, we expect a pause in the price appreciation of homes, but not the end of the boom locally.
- Take a look at the current charts below to get a picture of what have outlined for you.
We are including our FREE market report, so that you may keep abreast of the conditions impacting your local neighborhood in Irvine. We believe our city is a unique real estate environment. While macro economic conditions impact our local housing market, we cannot and should not rely solely on National and Countywide news sources for our local housing trends. These broader housing statistics do not accurately reflect what is happening in your local neighborhood.
Irvine Real Estate Market
While the nation had 12% growth year-over-year, according to the Case-Schiller Index, we had 25% growth. Our monthly reports track your neighborhood’s inventory, median price, price per square foot, median sales price, average days on market and more. Our market reports are updated regularly, and are FREE to you, so that you can stay “ahead of the curve” as to the direction in which the housing market is heading throughout the year and at absolutely no risk. We hope you find this market summary useful. Our intention is to provide you with informative, helpful market data.
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Cheers and best wishes for a blessed Thanksgiving from our home and hearth to yours.
Robin and Eric Fenchel DRE#00936248/DRE#01223072 Century21Award 929.334.7373 (Direct )