After seeing an immensely hot first half of the year, the OC housing market seemed to slow down once the months of Summer hit. Despite still being a vast improvement on previous years numbers, Summer 2016 saw a dip in home sales, prospective buyers, and mixed feelings on increased home prices.
The cool down in the housing market can be attributed to the factors above, and a few others as well. Then again, we should also consider the fact that the slow summer season has been a trend in real estate for quite some time. With people taking off for vacations, and relaxing with their families, it’s understandable why fewer housing transactions are taking place. Here are four reasons why we saw the Orange County real estate cool down this summer:
1) Increased Home Prices
With the Orange County housing market being as hot as it was in the first half of the year, there is no doubt that increased home prices would follow. PropertyRadar reports that the average home price increased roughly 5% in July, in comparison to year-over-year statistics. Clearly, we can see how some homebuyers may be turned off by this jump, as they wait for affordability to kick back in.
2) Cash Buyers on the Decline
One of the influencers of the housing market in 2016 was the influx of cash buyers that entered Orange County, looking to buy their homes outright. July saw a decline of about 13% in regards to number of cash buyers without mortgages on their homes, which is down from the year-over-year information.
3) Homebuyers Turned off by Premium Prices
With the housing market improving significantly, this meant more people were in the market for buying a home. With more homebuyers, comes more bidding and competition. Reports show that the number of above-asking price home sales decreased throughout the summer, especially in July where they fell to 34% from May’s 38% rate. Fewer people able to afford these premiums, thus, led to a cooling of the housing market.
4) Increase in Pending Properties
Although not necessarily a negative indicator of the real estate market, the number of pending properties reported in the summer increased. With some of these escrows taking longer than usual, it brought about lower figures in terms of number of finalized home sales. Reports show that Orange County’s pending sales were up 8%, providing insight into the number of near-future home sales that are to occur.