The Orange County RCFE housing market will remain a Hot Seller’s Market for the remainder of 2020 and into the New Year, paving the way for persistent appreciation.
With strong demand and an incredibly low inventory, the market will continue to lean heavily in favor of sellers, resulting in RCFE home values rising.
One of the most popular toy fads of the 1980’s was the Cabbage Patch Doll. The dolls were a “must have” for Christmas. Eager parents flocked to stores only to be met with empty shelves. Tactical shoppers knew when shipments would arrive and would be the first in line to purchase as soon as the dolls were unloaded from the truck. It was common for people to offer $100 or more in the parking lot for a Cabbage Patch Doll that was still in the shopping cart in route to the family car. They retailed for $30. Why would someone pay over three times the original price for a doll? It was simple supply and demand. Coleco could not manufacture and ship enough dolls to match the unquenchable demand. As a result, retailers charged more for the dolls suggested MSRP and prices went up.
When there is a scarcity of something popular for sale, the price goes up. More people are desirous of a good than the number of goods available. If that sounds familiar, it is from the echoing lecture halls of Econ 101. It is basic supply and demand. When very little supply is matched with unbelievably strong demand, prices go up. That is precisely what is occurring in the RCFE housing market today.
There is a scarcity of RCFE homes for sale. It is not uncommon to hear that multiple offers are generated on an RCFE home that just hit the market. When this occurs, a bidding war ensues. It is as if a mini auction occurs. The highest and best offer wins and some buyers must go back to the drawing board and continue their search for an RCFE home. More buyers are desirous of RCFEs than the number of RCFE homes available. As a result, RCFE home values have been on the rise since June. That is when the Expected Market Time (the time between listing to opening escrow) first dropped below 60-day threshold, a Hot Seller’s Market.
The Expected Market Time is the speed of the market. The lower the Expected Market Time, the faster the market. It takes into consideration both the current inventory and pending sales. Today, it’s a market where sellers get to call the shots and values are on the rise. When there is more supply and less demand, the rate of appreciation drops considerably. But the exact opposite is true today.
In order for the market to remain hot for the remainder of the year, the supply must continue to be limited and demand must remain elevated. The active inventory will not change much from now through Thanksgiving. Thanksgiving marks the beginning of the Holiday Market. That is when fewer RCFE owners enter the fray and many unsuccessful, often overpriced, RCFE sellers pull their homes off of the market for the holidays and winter season, cyclically the slowest time of the year for real estate.
Current demand for RCFEs will remain elevated and strong from now through Thanksgiving. That is typical for this time of the year, but is quite remarkable given that its current level far surpasses recent years. Similar to the active listing inventory, demand will begin its annual drop the week prior to Thanksgiving, the start to the Holiday Market. That is when many RCFE buyers will place RCFE home shopping on hold in order to enjoy the holiday season. Buyer activity will continue to slow and reach its lowest level of the year upon ushering in 2021.
Intuitively, many will think that the drop in demand will mean that the market will slow considerably, but that is not the case. Remember, the supply, the number of available RCFE homes, will be dropping at a considerable rate as well. For RCFE buyers still actively looking for an RCFE home to purchase at the end of December, the fast-paced feel of the current market with multiple offers and bidding wars will be no different even in the midst of celebrating all of the end of year holiday festivities.
More people are desirous of a good than the number of goods available. That adequately describes the RCFE housing market for the remainder of the year and into 2021. RCFE buyers will be willing to stretch the price a bit in order to find success, resulting in steady appreciation for the foreseeable future.
If you are considering buying, selling or leasing an RCFE, please call us TODAY to explore your options. We would be delighted to evaluate your business and provide price guidance. We will help you obtain the highest possible price for your RCFE. If you are considering buying or leasing, let us help you find the RCFE that meets your needs and fulfills your requirements. We will analyze potential RCFEs to determine whether they are a good value and are fairly priced.
If we can be of assistance with your purchase, sale or lease of an RCFE or other property please call us today for your FREE Consultation:
Michelle (949) 397- 4506 & Melvyn (949) 500-3630