A Buyer Friendly Shift

“Year over year, the active listing inventory is higher, demand is about the same, and it is taking a lot longer to sell a home, which translates to a market lining up more and more in favor of buyers.”

-Steven Thomas, Real Estate Economist

Picture yourself cruising down PCH with the sun shining, music playing, and the ocean breeze in your hair—it’s the quintessential Newport Beach experience. But just like hitting unexpected traffic on Mariners Mile, the luxury real estate market here has hit a bit of a slowdown.

Not too long ago, sellers were zooming through sales faster than you can say "ocean view." But now? It’s more like a leisurely drive. Compared to last year, the number of homes on the market in Orange County has shot up by a whopping 41%, totaling 3,371 homes compared to 2,389 last year. That means there are more options for buyers, but sellers are finding it’s taking longer to snag that sale.

Demand? It’s holding steady compared to last year, with 1,531 pending sales versus 1,598. But homes are staying on the market longer—66 days on average now, up from 45 days last year. And get this—about 30% of homes have had to drop their prices at least once.

The good news? Mortgage rates have dipped, making it a prime time for buyers. With lower rates, you could afford a bigger slice of that Newport Beach dream home pie without breaking the bank. For example, mortgage rates dropped from 7.5% to nearly 6.75%, giving buyers an extra $70,000 in purchasing power. That’s a big deal!

Yes, the market’s cooling off, but it’s also becoming more buyer-friendly. For sellers, it’s all about setting realistic expectations and pricing right from the get-go. It’s not a race anymore—it’s about navigating the market with patience. Whether you’re buying or selling, understanding these numbers is key to making the most of today’s market.

Active Listings

The active inventory jumped 10% higher in the past couple of weeks.

“The active listing inventory increased by 319 homes in the past two weeks, up 10%, and now sits at 3,371, its highest level since November 2022. It was the most significant rise of the year by far. Generally, at this time of year, the inventory rises at a much slower pace, but not this year. Strangely, it comes on the heels of easing mortgage rates, which is a much better environment to be a buyer. If rates continue to ease over the coming weeks, expect demand to rise and the inventory to reach its cyclical summer peak between July and August. From there, the inventory will slowly fall through the Autumn Market and pick up speed during the holiday season.”

-Steven Thomas’ Housing Report

Demand

Demand dropped by 6% in the past couple of weeks. 

Demand for homes, dropped from 1,624 to 1,531 recently. That’s a 6% decrease, the lowest it’s been since February. It’s pretty much on par with last year’s levels right now, but that could change as we move through the year.

Last year around this time, mortgage rates were sky-high, like above 7% and even hitting 8% in October. But now, things are flipping. With the job market easing up and inflation cooling off, the Federal Reserve is gearing up to start cutting rates in September. Already, 30-year mortgage rates have dropped from 7.5% in April to 6.89% today. And guess what? As rates keep falling, more folks can qualify for loans and afford more expensive homes. That usually means more demand for houses.

We’ve gotta keep an eye on economic reports though, 'cause they can swing mortgage rates up or down based on how they stack up against what the market’s expecting. The Fed’s got a big meeting next week where they’ll talk about their plans, and that could really shake things up.

Comparing to last year, demand was a bit higher—about 4% more pending sales than now. And before COVID, the average was even higher, like 68% more pending sales than today. So, yeah, supply of homes for sale is going up while demand’s easing, which means it’s taking longer to sell houses these days. The Expected Market Time just jumped from 56 to 66 days recently. Last year, it was quicker at 45 days, and before COVID, it was even slower at 80 days.

Luxury End

The luxury market slowed in the past couple of weeks. 

So, in the past couple of weeks, the number of homes up for grabs jumped from 1,130 to 1,188—a 5% increase, the highest since October 2019. However, demand slipped a bit by four pending sales, down 2%, leaving us with 226 homes in the pipeline.

With supply going up and demand tapering off, the Expected Market Time has stretched from 147 to 158 days, the longest since January. The higher the price tag, the slower the sale seems to be these days.

Comparing to last year, we’re seeing a 46% increase in luxury homes on the market and a 14% uptick in demand. Last year, homes in this range were moving faster with an Expected Market Time of 123 days, much speedier than now.

And get this—depending on the price bracket, the market time varies widely. For homes priced between $2 million and $4 million, it’s gone from 109 to 116 days. Homes in the $4 million to $6 million range are sitting around 156 days now, up from 148. But if you’re dealing with homes over $6 million, you’re looking at a whopping 630 days to secure a deal—so, not until around April 2026.