2019 REAL ESTATE MARKET
It seems timely to take a look at the real estate cycles in years past and project what the market is likely to do in 2019.
No one I know has a crystal ball that they can use to see the future with absolute clarity. But thanks to Steven Thomas, local real estate broker and economist, we have some data we can refer to and extrapolate from to try to predict how the market will behave this year.
There is an annual cycle, the data show. We start each year with a low point for both inventory of homes for sale and demand for homebuying. The inventory usually gradually builds up until about Labor Day, then slides toward the holidays to the year-end low.
Our historical data show that demand ramps up more quickly, with a sharp increase from Super Bowl Sunday, then gradually continues to increase until about Memorial Day, at which point, it begins to taper off for the remainder of the year.
So, generally speaking, demand is at a high for the first five months of the year, then people get busy with kids’ graduations, vacations, and other distractions, which skid into the holidays, which now start at the end of summer. You have seen the Christmas decorations in Costco in August, right?
Inventory, however, starts out slowly, then keeps building until the end of summer. Maybe because sellers think that everyone wants move in the summer. Actually, more people are buying in the winter and spring.
And even though we have about 59 percent more inventory now than this time last year, and there were about 24 percent more pending sales last year, the cycle should follow the same pattern.
This increase in inventory and drop in demand has flipped us from the strong seller’s market at the start of 2018 into a slight buyer’s market as we start 2019.
This impact can be seen in the average days on the market, which has gone from 65 days on average last year to 127 days as of the beginning of 2019. That’s double from last year.
For home buyers, this means you have more choices, more time to kick the tires, run the numbers, and get your loan even partially underwritten before you make an offer. You actually have time to go look at the house more than once, for more than five minutes, before you submit an offer. You’ll also probably be the only offer on the table. Multiple offers on the same home are no longer the norm.
For home sellers, this means put your house on the market the Thursday before Super Bowl Sunday, which this year falls on Jan. 31. You’ll have it staged to perfection, take professional photos, and you’ll price it right at market value, and anything else you can think of to stick out for potential buyers.
What’s going to happen to home prices?
Despite the turning tide in supply and demand, the Orange County median home price peaked in May and September at $740,000 – up from a 2017 peak of $710,000.