Compared to last year, demand is stronger, there are fewer homes on the market and the expected market time is much lower.   The first time home buyer wave continues to grow and plant the seeds to an eventual recovery.  First time home buyers are fueling a surge in activity that continues to flourish and has been steadily growing since the middle of February.  Multiple offers in the lower ranges, homes priced below $500,000, are now quite common throughout Orange County.  Demand has not only surged past the 2007 level, but is quickly approaching the 2006 level.  Until just four weeks ago, year over year demand had not been stronger than the prior year since September 2005, the beginning signs of the current slow cycle.  Demand, a snapshot of the prior 30 days of escrow activity, has climbed by an additional 166 escrows in the past two weeks to 2,540.  Last year at this time, demand was at 1,863 escrows, 677 fewer than today.  Two years ago it was at 2,701, or 161 additional escrows. 

The active listing inventory has remained steady in 2008.  In the prior two weeks, the active inventory has dropped by 119 homes to 15,437.  We started the year with 14,724 homes, 713 fewer than today, but that was after shedding 1,050 homes in December 2007 with sellers pulling their homes off the market for the holidays.  Still, that only represents a 5% increase so far this year compared to a 37% increase in the inventory last year.  Two years ago there were 3,481 fewer homes on the market; however, the inventory was growing at an extremely rapid rate in 2006. The inventory had already increased by 65% to this point and it continued to grow by another 34% until reaching its peak of 16,006 homes back in August 2006.  Today, the active inventory has steadily remained just under 16,000 homes and appears as if it will continue along that path.

With steadily increasing demand and a stable active inventory, the expected market time has dropped like a rock.  Starting this year with a market time of 15.6 months, a deep buyers market, the market time has improved to its lowest mark of the year to date at 6.08 months, a 61% drop.  Last year the market time was at 8.33 months and climbing at an alarming.  Two years ago the market time was at 4.43 months and climbing.  By the end of June 2006, the market time had blossomed to 6.33 months.

So, it is safe to say that the Orange County housing market has definitely changed gears this year.  The lower ranges and the flood of first time buyers are entirely responsible for this change.  What changed?  The answer is quite simple:  the significant drop in prices has allowed buyers that have been sitting on the fence to finally afford to buy once again.  After being priced out of the market with rampant appreciation earlier this decade, affordability is finally improving and inviting buyers that have been waiting a long time to finally purchase.  Properties priced below $500,000 account for 47% of the entire active inventory and 56% of demand.  Last year, this same range accounted for only 26% of the active inventory and demand.  Detached homes below $750,000 are actually experiencing a slight sellers market, below the five month mark.