I wish I had the answer... the Secret Sauce, the Magic Potion, the Crystal Ball. You know THE ANSWER. Are we, or are we not, at the bottom of the OC real estate market yet?
According to the experts, market equilibrium (where the buyers and sellers are again on equal footing) is reached when inventory levels are anywhere from 4 - 6 months. This means that at the present rate of sales, it would take 4-6 months to sell all the homes currently available.
Here's a great new video from Wall Street Journal online featuring Kelsey Hubbard, who underscores that she thinks we'll be reaching a "soft bottom" when we hit the 4-6 months inventory mark. Has Housing Hit a Bottom?
Here's a news flash. The Orange County market time has reached an average of 2.69 months, as of July 23, 2009. So it obviously it all depends on where you are looking. There is more appetite for lower priced homes. Attached homes priced at $750,000 or higher and detached homes priced at $1 million or higher are taking dramatically longer to sell.
Across the board, homes in cities where the median price is less than $500,000 are typically selling in less than an average of 60 days. We have reached the schizophrenic reality where distress sale homes sell with multiple offers immediately, within days, while stunning virtually new custom estate homes might take 2 years to sell, even at a 30% discount from the last sales price.
Welcome to our madness.
So it would seem that, yes, we appear to be at the bottom, depending upon the market segment in question. If you are a first time buyer, looking to cash in on that $8,000 stimulus credit, you'd better get cracking and now. If you have less than 20% down you'll be facing tremendous competition for entry level priced homes. If you have less than 10% down and need FHA or VA financing the odds are even more heavily stacked against you.
Buyers need to get ready to write numerous offers as aggressively as they can if they want to score a great deal in the lower price ranges. It is a strong seller's market for them. If there was indeed a logjam created by California's June moratorium on foreclosures and more inventory does flood the market starting in Fall, we'll need to see an additional 50% increase in the inventory just to turn this tide.
I'm not about to guess whether this will happen or not. Maybe yes, maybe no. It would seem statistically improbable. But then, so did the entire last 24 months. So stay tuned - I'll keep you posted.
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