We’re sure at some point in 2021 you’ve come across an article about home
prices skyrocketing, or inventory plummeting, or even the viral story of a
family offering naming rights to their firstborn just to get an offer accepted!
Well, those articles weren’t wrong. Here in Orange County, we experienced
and saw it all… yes, including the naming rights too!
In most areas of Orange County, we saw homes appreciate in value around
20% in one year… some areas as much as 25%. Don’t believe me? Let’s
do the math. In December of 2020, the median sales price for a Single-
Family Detached home was $955,000. As of today, the median price for a
Single-Family Detached home in OC is $1,150,000. That’s a 20.4% increase!
How about inventory? The stat we like to follow is called “Months Supply
of Inventory” which essentially means if there were no new listings to come
to market, how long would it take to sell off the current supply? Historically,
a neutral market, one that neither favors the seller nor buyer, is about 5
months. Anything below 5 months would be considered a Seller’s Market,
anything above would be considered a Buyer’s Market. Today, we are sitting
at about 1.5 months supply. So even if we tripled our inventory overnight in
Orange County, it would still slightly favor the Seller.
What should we expect in 2022? We should expect a little bit of improvement
on all fronts: Prices should continue to appreciate (this time at a much more
moderate pace) and inventory should start to rise. After speaking with one of
my preferred lenders, he also suspects the interest rates to stay relatively low
(although they should increase slightly). This means that things should start
to balance in 2022. Buyers should have an easier time getting an acceptance
on a home for a fair price and lock in at a great interest rate. Sellers will
still be able to sell relatively quickly for a great price. However, don’t expect
homes to sell within the first weekend anymore. The ones priced right will.
But when buyers have more inventory to choose from, they can take their
time, be a little selective, and it will be less competitive overall.
Any little bit of balancing, or leveling, or slow-down will be picked up by the media as
“Real Estate Crashing.” Just remember, what we’ve been experiencing over
the past 18 months is not normal, and it will not be like this forever. A slow
down is actually going to be a normalization. Here’s to a great 2022!