An Endless Summer for the Irvine Housing Market
As we reach the traditional end of summer housing sales point, we still see a heightened desire for Buyers to purchase at healthy prices that Sellers have set which is normally observed at the beginning of the summer. In other words, the rebound continues.
While the naysayers continue to blast that the housing bubble is fast approaching, the Buyers that are on board are enjoying new ownership in their replacement home, and Sellers are celebrating their fully valued prices, which eighteen months ago would have been far-fetched fantasy.
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.
The large builders, locally, are breaking ground/gearing up for a robust Fall in which eight new home builders have been invited to develop out the area that had previously been known as El Toro Marine base, and is now called The FivePoint Communities development in the Great Park.
With approximately 5,000 homes already scheduled to be built, plus an additional large number yet to be approved 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 pot. 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. We recall that at the beginning of the year, the Irvine Company expected 4.5% to 6% growth for the entire year. The price appreciation would double what was predicted, and, with the 20+% growth in prices in calendar year 2012 locally, the 30% appreciation would be completely unpredicted, unexpected and match 2004-2005 run up in prices.
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 1st, there were a total of 548 homes available for sale, with 308 in escrow
The active inventory has ceased increasing by 5% per week these last six weeks, and seems to have reached a temporary equilibrium point. The demand had remained stationary between 330 and 370 for the last four months is now slightly declining, which can be attributed to the large spike in interest rates recently.
The prices of homes entering the market are still increasing, but the speed in which they are selling has slowed down.
Even with an increasing number of homes coming on the market, at what appears to be overly optimistic prices, homes are still receiving offers and prices are still being bid up. 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 few 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 three months should not see as much price appreciation.
As the new homes market gears up to accommodate the demand, plus as the resale market has added additional inventory, we expect the supply to start to satisfy the potential pool of Buyers, and we would expect the appreciation of prices to slow as we enter the fall.
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. 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.
Take a look at the current charts below to get a picture of what have outlined for you.
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