OC Housing Report

Going, Going, GONE!

February 8, 2022

When a record low number of available homes is matched  with fierce pent-up demand, it results in an auction where homes sell immediately and for more than their asking prices.

Selling Above the Asking Price

It is common for homes that are just placed onto the market to receive dozens of offers to purchase, pushing up home values at a rapid pace.

 

Current demand is at 1,683 pending sales. Demand is 413 higher than the active listing inventory. The three-year average for demand prior to COVID was 2,160, significantly lower than the three-year average for the active inventory of 4,843 homes, 2,683 lower to be exact. That illustrates how demand is normally a lot lower than the supply, not the other way around, as is shown in the chart above.

When demand outstrips the supply, it indicates that it is an insane, outrageous, red-hot housing market where buyers are pit against each other and Darwinism ensues, survival of the fittest. In today’s market, typically the buyer that is most qualified with a great job, large bank account, strong credit score, willing to remove contingencies, and bend to a seller’s every whim is the victor. That includes offering more than the asking price. In January, 60% of all closed sales in Orange County sold above their asking price. And, it is not isolated to the lower end. If a home is priced right, regardless of price range, a bidding war follows.

The auction-like atmosphere will continue if inventory remains at ultra-low levels. Higher rates are not yet deterring buyers from purchasing, but if they continue to rise, it will be a totally different story down the road.

A WARNING TO SELLERS: Carefully pricing a home is crucial to obtaining the best outcome regarding price and terms. Pricing at or slightly above the last comparable pending or closed sale will expose the home to the largest buyer pool. The auction that follows will have buyers competing against each other to achieve success. This results in sales prices above their asking prices, and in many cases, way above their asking prices. Stretching the initial asking price considerably above the comps may still result in achieving the ultimate goal in selling; HOWEVER, it will be at the expense of not obtaining the highest and best price and terms.

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 43 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and son Matt, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 23 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, as well as sponsors Paper Shredding and E-Waste Recycling events twice a year.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.