OC: Housing inventory climbs 84%
Doors may open for homebuyers
Housing inventory climbs 84% in two months as homes linger on market.
www2.ocregister.com
By HANG NGUYEN
The Orange County Register
The winds have shifted.
An undisputed seller's market for Orange County homes has become somewhat more of a buyer's market in recent weeks.
April's median home price tag of $523,000 may have been a high point that, at least temporarily, scared off some buyers while nudging more owners to sell. That's left far more homes sitting on the market today for longer than just a few months ago.
At the end of March, there were about 5,550 resale condos and traditional homes for sale on the Southern California multiple-listing service, which consists of mostly Orange County properties, according to consulting firm Real Data Strategies in Brea.
That supply spiked to 10,210 resale homes in late May - an 84 percent jump that gives buyers more choices and more room for price negotiation. Real-estate observers say "for-sale" signs are staying planted in front of residences longer. Bidding wars for homes are much less fierce, if they even exist at all.
"I think it's the beginning of the end of this cycle at this intensity," said real-estate agent Dick Lobin at Century 21 in Huntington Beach. "I think we've hit the wall."
What's surprising is how quickly the market switch has occurred.
"It's like someone turned the faucet down to a drip," Lobin said.
The home market isn't as volatile as, say, the stock market. But changes can come relatively quickly.
At the end of the last housing boom, in May 1989, O.C. home prices were enjoying 24 percent annual appreciation, according to DataQuick.
By September 1990, those profits had turned into annual depreciation - losses that extended for nearly seven years.
A POWER SHIFT
Part of the recent rise in the number of homes for sale is the season. More people tend to sell their homes this time of year.
But historically that trend added only 25 percent more homes to the for-sale pool - roughly one-third the current expansion rate, said Pat Veling, owner of Real Data.
"Buyers are getting hesitant about the prices being asked," he said. "At the same time, sellers have sensed that the market may be at or near its peak. Many sellers who might have waited until later have decided to sell now."
A growing supply of homes for sale is occurring across the county in all price ranges, Veling said.
It comes at a time when buyers are pulling back. Agent Jeff Shank at First Team Real Estate in Irvine reports that recent "open house" viewings drew maybe six shoppers compared to 70 people in the past.
"Buyers have sort of retreated," he said.
Greg Hughes is seeing the same thing.
The broker for The Real Estate Corner in Laguna Hills says it wasn't too long ago that five offers were made for a home during the first two days on the market.
"Now, they're sitting there 14 to 15 days before they get their first offer," Hughes said.
And these bidders are often a "bottom-of-the-barrel buyer," said real-estate agent Jack Rosemary, who covers north county.
These buyers are truly stretching financially to get into the home - an unattractive customer for the seller, he said.
Owners are having a somewhat harder time selling because supply is on the rise.
The California Association of Realtors show that April's supply of homes for sale in Orange County equaled roughly 1.4 months of sales activity. That's more than double the rate from the previous month and the biggest supply in a year.
Some sellers are having no luck. Real-estate agents typically agree to sell a home within 90 days. That used to be plenty of time.
However, some agents' contracts are now expiring without a buyer found, said Century 21's Lobin, who covers central Orange County.
This buyer/seller mismatch means pricing power now rests somewhat with the buyer.
In south Orange County, broker Hughes says, sellers used to watch a neighbor sell a home for, say, $1 million, then when it was their turn to sell, they would mark the price up $50,000.
Today, sellers stick closer to the prices their neighbors received.
Other sellers are resorting to cutting the price, said Bill Hill, an agent at Strada Properties, which represents clients in Laguna Beach and Newport Beach.
Real-estate consultant Veling expects that in the next 45 to 60 days more sellers will drop their asking prices 3 percent to 8 percent.
"We are not going to see bidding wars, and we won't see houses sell for more than the list price," he said. "Those days, at least for now, are over."
LIGHT AFTER DARK?
Peter LeNoach, who once panicked about buying an Orange County home, isn't so frightened any more.
LeNoach, 31, moved to Orange County from a Chicago suburb three and a half years ago. His fiancée, 26, arrived 18 months later, and the two began shopping for a home.
They didn't think it would be a problem.
After all, LeNoach, a project manager for an engineering firm, and his fiancee, an office manager for an insurance brokerage, make $115,000 a year. They have no debt, not even a car payment. And LeNoach has cash from selling a two-bedroom condo in Schaumburg, Ill., for $85,000.
So they were shocked when they couldn't find something they liked and could afford. Their situation only got bleaker as O.C. home prices quickly grew even more expensive.
"You see this happen and you think, 'If I don't get in now, am I hosed? Is this it?' " LeNoach said. The sky-high home prices are "absolutely the greatest threat to our ability to stay in Orange County long-term."
The couple stopped looking for a home last winter, staying in their one-bedroom apartment in Huntington Beach.
Now LeNoach hears that more homes are on the market in Orange County as more buyers balk at the high prices.
"It's an encouraging sign," he said. "It certainly makes me feel a lot less desperate."
That doesn't mean he will be shopping any time soon.
"If I bought now, I would still fear that I would be buying near the peak," he said. |
