1. Chapman University says....
2. Inventory is rising but...
3. DOM (Days On Market) has returned to more normal levels...

The shifting market continues, there is a lot of discussion and some concern about what is happening in the market.  We will open with some comments on the entire OC market but quickly drill down to the local, neighborhood level.

Fortunately, the annual Chapman University Economic forecast was presented in December.  We do make some references to their report.  Specifically, Volume 37, Number 1. 

We have been a fan of their work for more than 30 years.  They predicted the housing bubble in 2003 and continued to do so until the crash even though other universities scoffed until 2007.  In fact, at one point, UCLA's forecast headline was "There's no 'Bubble' in LA".

This newsletter is focused on the primary neighborhoods  we work in and review monthly.  The select communities  that are subject of this report run from Newport Beach, through Irvine, to Ladera Ranch.

1. Chapman University

Chapman University says that portions of the County are already in a Buyer’s Market condition.  They say there is a direct almost infallible correlation between inventory levels going above 3.5 months and prices dropping 9 months later. 

They were surprised with the reliability of this relationship.  They are reporting the county's average inventory as of November 2018 is up to 4 months of inventory as compared to 2 months in 2017 and 2.4 months in 2016.

They attribute the slowing sales to RISING MORTGAGE RATES and successive years of RELATIVELY HIGH RATES OF APPRECIATION without a correction.

They are forecasting slower national and county economic growth with slowing appreciation and slower sales in both the new home and resales markets.

They predict appreciation levels of resales to remain positive but drop to an average 2% in 2019 compared to the 5%+ we have experienced over the past several years. 

2. Inventory On The Rise

Inventory is rising in the 22 select communities that we have prepared market specific summaries for. These show year-over-year ​Inventory has risen in 2018 relative to 2017, sometimes sharply. 

In most markets / neighborhoods however, because Inventory in 2017 was so low, Inventory remains below 2015 and 2016 levels.

 

To demonstrate our thoughts we will use samples from several communities.  

Baker Ranch SFR (Lake Forest)

In Baker Ranch year-over-year inventory has changed as shown below.  Red indicates rising Inventory. The majority of the communities experienced similar changes. Note that even though there were sharp increases through the end of the year, at the bottom right of the table the over-all impact was the average monthly inventory ended only 2% above the prior year levels.

In the second image below note Baker Ranch did finish the year as a Buyer's Market and the average price of homes that sold during 2018 declined.

The image below is taken from our Summary Page for Baker Ranch. It shows BR was stuck in a Buyer’s Market for the last half of the year. The price drop on the larger homes reflects Chapmans relationship between market conditions and pricing.

COMPLETE COMMUNITY REPORTS

Year-End Result for 2018 by community.

Each is a full report for the specific neighborhoods. If you want to discuss the Results for your neighborhood, please contact us. It would be our pleasure to discuss them.

You can find the SUMMARY TABLES that rank each community by activity at this link.

You can sign up for our 90-day Market Snapshot Newsletter for other communities BY CONTACTING US and letting us know which communities are of interest.

AND you can sign up for our Quarterly reports or request custom reports for any city, master plan community, or neighborhood in California.

CLICK on each link to review a community:

1. Newport - West Bluff / SAH SFR          Single Family Residential (SFR) 
2. Irvine - Turtle Rock.........SFR            1500 sf  & larger 
3. Irvine - Turtle Rock.........Condo        1100 sf & larger
4. Irvine - Woodbridge........SFR             1500 sf & larger
5. Irvine - Woodbridge........Condo        1400 sf & larger
6. Irvine - WestPark............SFR             900 to 3200 sf
7. Irvine - Stonegate...........Condos      1500 sf & larger
8. Irvine - Portola Springs....SFR            1500 sf & larger
9. Irvine - Portola Springs....Condo       1500 - 3000 sf
10. Foothill Ranch.................SFR            1500 sf & larger
11. Portola Hills....................SFR            1500 sf & larger
12. Coto de Caza...................SFR             $600,000 to $999,000
13. Coto de Caza...................SFR             $1,000,000 to $2,000,000
14. Ladera Ranch .................Condo      1100 to 1800 sf
15. Ladera Ranch..................Condo        1801 sf & larger
16. Ladera Ranch..................SFR             1500 to 3250 sf
17. Ladera Ranch..................SFR             3251 to 4800 sf
18. Baker Ranch..................SFR            1500 to 4000 sf
19. Costa Mesa - West Side            900 to 3000 sf sf
20. Robinson Ranch & Rancho Cielo.......SFR           
21. Dove Canyon.......SFR