LUXURY IS MUCH SLOWER
With an expected market time of 168 days, nearly six months, the luxury housing market in Orange County is much slower than the lower ranges.
There is no wait time at the TSA security checkpoint at LAX. The drive-thru at Starbucks has no cars. The local favorite restaurant, typically booked for weeks ahead of time, has a table for two available for Friday night. It is sunny with no rain in the forecast, yet there is no wait when pulling up at the car wash. That just about sums up Orange County’s luxury housing market: there are simply not enough buyers compared to the number of sellers. Demand is low. There is no line of buyers waiting for another luxury home to be placed on the market.
The Los Angeles Times detailed how “Southern California home values near record despite the high cost of borrowing.” CNBC touts that “Home prices kept rising even as mortgage rates surged.” Yahoo Finance describes “Why the current housing market is a ‘seller’s paradise.’” It is understandable how luxury sellers have high expectations. The trouble is that these headlines describe the overall market and not luxury. Luxury today is a much different segment of housing.
The headlines can be confusing. They seem to paint a strong housing market for all price ranges. They are NOT reporting on the luxury market. The housing market is split between luxury and the rest of the market. Luxury housing, the top 10% of closed sales, homes priced above $2 million, is sluggish. Weekend open houses are not flooded with potential buyers. Multiple offers are not as common as the lower ranges. It is not unusual to go a week, or even weeks, without a single buyer touring a luxury home. There is not as much buyer competition.
The Orange County housing market has cooled noticeably since the spring. From the end of April to today, the overall market slowed from an Expected Market Time (the number of days between coming on the market and pending status) of 37 to 59 days. On average, it takes 22 more days to sell a home. Yet, the differences are staggering in splitting the market between non-luxury and luxury. For homes priced below $2 million, this range has decelerated from 28 to 44 days, adding 16 days, a little over two weeks to the Expected Market Time. Yet, the luxury market moved from 101 days in the Spring to 168 days today, an extra 67 days. The lower ranges take a little over six weeks to sell today compared to 24 weeks for luxury, nearly six months.
