Q4 2018 Market Update

Posted by David Feldberg on Saturday, February 2nd, 2019 at 9:06am.

Hello fellow real estate investors. I wanted to take a few moments to discuss what I am seeing in the real estate market here in Orange County, California. Let me start with how I am looking at the data.

Here in Orange County, we have a very wide range of home prices and sometimes those incredibly expensive homes can skew the data. So you will notice that I have used the median price rather than the average to try to get a more accurate picture of what is happening. Also, this data is for all of Orange County. If you would like specific city, area, or neighborhood stats just contact me and I will get you the data.

Over Q4 of 2018 we saw the median price drop-in single-family homes, townhomes, and condos. There are a few things that caused this in my opinion. First, interest rates certainly trended higher the 2nd half of the year which will always put downward pressure on price.

Second, there were a lot of unrealistically priced homes that were hitting the market. These homes would typically sit and then end up going at a discount due to high days on market (you will notice the days on market increased month over month for the whole 4th quarter and the percentage of list price received went down with it).

And finally, the supply of homes was terrible. Normally if there is a shortage of available homes for sale you would expect prices to increase, however we saw a lack of demand and many homeowners just decided not to move as they couldn't find a suitable replacement. So good homes sat and lower priced homes (comparatively) are the homes that sold.

 

Two other items to note. Fourth quarter is typically my slowest quarter. Most people are thinking about Thanksgiving, family, holidays, vacation and everything else but certainly not moving during this quarter. Also, in November of 2018 we had elections and in our current geo-political state there were a lot of folks waiting to see what was going to happen politically before making any moving or housing decisions.

With all that being said, I'm actually starting to see the housing numbers increase for the month of January—albeit on a micro level. Rates have come back down and I am definitely seeing an uptick in my business earlier in the year then I normally do. The macro fundamentals for home prices here in Orange County are still good so it should be a good year but honestly you never know.

I get asked "What do you think home prices are going to do this year?" all of the time and what I'm telling my clients is for now it looks like we should see single digit appreciation this year but don't buy for one year. Buy and hold and it will all work out wonderful in the end.

If you have any further questions or would like to chat further about the market you can always contact me and I would be happy to chat in more details with you.

David Feldberg
david@coastalgroupoc.com
(949) 439-6288

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