Low inventory of homes, pent-up demand create ‘extreme’ seller’s market in Orange County coastal cities
In Orange County’s hot residential real estate market, multiple offers are commonplace and often come in well above the asking price.
Valerie Torelli, founder of Costa Mesa’s Torelli Realty, recently represented a buyer who made one of 48 offers, according to the home’s listing agent, Fred Sed of Keller Williams, Irvine.
Torelli recalled a weekend earlier this month when a house on Magnolia Street in eastside Costa Mesa drew “54 showing appointments in 15-minute increments where clients and agents stood in line. The house was listed at $999,900, and sold for $1.375 [million] within three weeks of listing.”
With no open houses allowed because of pandemic restrictions, the only way to physically view a property is to first make an appointment online.
Torelli, who has been in the real estate business since the early 1980s, has seen cyclical ups and downs over the years. But she said she has never seen so little inventory and such a skewed market with prices rising exponentially since the end of January.
“People weren’t moving during COVID-19, which created a bottleneck [of buyer demand],” Torelli said. “People didn’t put homes on the market and they’re still not moving, including a lot of seniors who are staying put and remodeling.”
Torelli’s clients have told her their homes have become their sanctuaries, something they never thought about until now. They spend more time in the kitchen and are enjoying cooking. Many have decided to work with what they have and started remodeling.
“The low interest rate on refinancing enables remodels,” said Torelli. “It’s incredible. They put $150 to $200K into a home, and several in the Mesa Verde tract have been torn right down to the ground [for remodeling work]. Money is cheap, people aren’t moving.”
Torelli sees the hot real estate market continuing “as long as there’s low inventory and low interest rates,” she said. “With interest rates below 3%, lack of inventory, buyers wanting to have their own homes and the family unit becoming more imperative during pandemic.”
Brian Gibney, president of the Newport Beach Assn. of Realtors and associate broker agent for Villa Real Estate agreed that the lack of inventory and low interest rates are driving an “extreme” seller’s market that hasn’t been seen in a long time.
“Who would have thought after what we’ve been through, with the shutdown, that the market came back even stronger despite no open houses?” said Gibney.
He explained that sellers taking advantage of the sky high prices and getting top dollar are often remote workers who don’t need to be in an office. Many are moving to other states such as Texas, Oregon or Colorado. The buyers, he said, are coming from cities such as Los Angeles and San Francisco. They are looking in Costa Mesa and Newport Beach, he said, and are putting an emphasis on outdoor space, more square footage and home office space.
Gibney noted that because the market is so competitive, buyers have been asked to remove all contingencies, such as loan, appraisal and inspection, and some sellers are asking for nonrefundable deposits.
Elizabeth Do, affiliated with three Keller Williams offices, works all over the county along with her team of 27 who speak seven languages among them. Do believes Orange County has it all and notes it is a diverse melting pot.
“These days with the migration pattern of moves, being a local Realtor you must know the entire area,“ said Do. “With the current situation people are not comfortable in the [areas] where they live and in one weekend we had clients from Atlanta, Chicago and Silicon Valley.”
She said the Chicago family had two small kids, so Irvine was their top pick because of its schools. The customer from Atlanta was a single man looking for beach access, food options and diversity and culture.
“He read that Huntington Beach and Costa Mesa had that kind of vibe,” she said. “And the Silicon Valley [client] was looking more in Fountain Valley and Westminster for a Vietnamese influence.”
Sellers who don’t want 50 people traipsing through their house during the pandemic set strict prequalification policies prior to a showing.
The off-market transaction trend also discourages foot traffic. These homes are not listed in the multiple listing service, nor advertised to the public on websites. Instead, agents bring select buyers to the seller.
But house-hunting websites continue to play a vital role, with offers coming in despite the fact the property has not been seen in person.
According to the Newport Beach Board of Realtors’ 12-month stats for each city ending March 2021, prices and sales have risen while inventory has decreased in all four of the local beach communities.
- In Newport Beach the median price rose 8.6% to $2,145,000, sales increased by 11.5% to 1,067, and there is a four-month inventory supply, down 31% over last year.
- In Huntington Beach, the median price rose 6.5% to $1,022,500 and sales went up 4% to 2,017. There is a 1.9- month inventory supply, down 29.6%.
- In Costa Mesa, the median price rose 6% to $890,000 and sales surged 5.8% to 937, with a two-month inventory, down 23.1%.
- In Laguna Beach, the median price climbed 21.3% to $2,325,000 and sales surged by 20.6% to 398, with a 6.4-month inventory, down 36%.
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