As sellers encounter the slowest Spring Market since the COVID lockdown in 2020, careful, deliberate pricing is essential to secure success.  

Reduce and Net Less

Imprecise pricing results in longer market times, price reductions, and walking away with a smaller net proceeds check. 

Time for spring cleaning and garage sales. Many homeowners participating in the neighborhood garage sale quickly realize the importance of careful, meticulous pricing. Most buyer activity occurs the moment items are strategically placed on the driveway. After the first hour or two, the crowds diminish and sellers are left scratching their heads and second-guessing their pricing. After adjusting the price lower, they know that the longer they wait, the fewer shoppers arrive, and the higher the probability they will not be able to move their used merchandise. 

Today’s sellers are also realizing the importance of careful, meticulous pricing. It does not feel like a typical Spring Market. There is much more seller competition, the market is slowing weekly, and sellers are left second-guessing their price. They realize that the spring clock is ticking. The longer sellers are on the market, the fewer buyer showings, and the more doubt sets in. 

Precise pricing is crucial in securing success, especially this year. It sets the stage for immediate buyer interest and is the most critical first impression before a buyer even sets foot in a home. Today’s buyers are educated and understand value after immersing themselves in the housing market for several weeks. They utilize their favorite real estate app and wait for the next home to hit the market. They look at every photo and soak in all the details: bedrooms, bathrooms, square footage, condition, upgrades, location, lot size, amenities, year built, garages, storage, view, etc. The price is most important. It is the differentiator between a buyer choosing to see the home in person or waiting for the next home to hit the market. 

After the initial 10 days of coming on the market, most seasoned buyers have seen a home. Even if they decide not to tour the house in person, they feel as if they have at least completed a “phone tour” and are ready to move on to the next one. The longer a home is exposed to the market, the less activity it receives. Many sellers mistakenly expect a giant boost in showing activity after adjusting the asking price lower. When a seller reduces the asking price, it is not met with eager anticipation and excitement like when it was initially placed on the market. Currently, 33% of all active listings in Orange County have reduced the asking price at least once. Sellers do not get a second chance at the initial first impression. 

The data illustrates that initial, meticulous pricing is the best strategy to walk away with the most money in the least amount of time. Yet, when a seller starts overpriced, requiring a reduction to secure success, the seller walks away with less. The sales price to last list price ratio demonstrates that accurate pricing is crucial. This refers to the final list price before becoming a pending sale. These are averages, meaning there are exceptions, but the overall trend is mind blowing. In Orange County, 80% of all closed sales in March did not reduce the asking price. 

The sales price to last list price ratio for these homes was 99.8%, meaning, on average, a home appropriately priced sold close to its initial asking price. A house listed at $1 million sold for $998,000, only $2,000 below the asking price. The median days on the market before becoming a pending sale was 18, revealing that accurate pricing also means noticeably less time on the market. 

11% of all closed sales reduced their asking prices between 1% and 4%. The sales-to-last list price ratio for these homes was 97.8%; on average, it took 69 days to become a pending sale, over two months. A house that reduced its list price to $1 million sold for $978,000, a considerable $20,000 less than the homeowners with no reduction. 

For homes that reduced their asking prices by 5% or more, 9% of closed sales in March, the sales-to-last list price ratio was 96.5% after being on the market for 96 days, over three months. A home that finally reduced its price to $1 million sold for $965,000, a shocking $33,000 less than the homeowners who did not need to reduce the asking price. 

The sales price to original list price ratio reveals how far off the mark many sellers are when they finally arrive at a home’s actual market value. This is the price of a home when it initially comes on the market before any price reductions. For homes that reduced the asking price between 1% and 4%, the sales price to original list price ratio was 95.1%. For example, a house initially listed at $1,028,000 had to reduce the asking price to $1 million to secure success and ultimately sold for $978,000, an astonishing $50,000 less than the original price.  

Homes that reduced the asking price by at least 5% had a sales-to-original list price ratio of 88.0%. A house initially listed at $1,097,000 had to lower the asking price, often more than once, to $1 million to find success, and ultimately sold for $965,000. That is an eye-opening $132,000 less than the original asking price. 

Given the increased competition, this year is proving to be a lot harder for sellers. The supply of available homes to purchase is up 81% over last year and at its highest level since 2020. Buyer demand (a snapshot of the number of new pending sales over the prior month) is down 1% compared to last year. Demand is nearly identical to the previous two years, yet inventory is up considerably. Given the significant extra supply and similar annual demand, the Expected Market Time (the number of days it takes to sell all Orange County listings at the current buying pace) is at 72 days, its highest level since the pandemic lockdown in 2020. It was at 41 days last year. In addition, the Expected Market Time is on the rise. It was at 61 days, its hottest point of the year, six weeks ago. It appears that demand reached its peak four weeks ago, while the inventory will, at the very least, continue to rise unabated through the Summer Market. The market will continue to cool weekly until the inventory peaks much later in the year. 

For homeowners about to place their homes on the market, it is imperative to scrutinize every comparable pending and closed sale and spend as much time as possible, carefully arriving at a home’s Fair Market Value. That does NOT mean adding a bit of cushion for negotiations or " testing” the market to see if a price is obtainable. That amounts to wasting valuable market time and ultimately walking away with less money. For sellers who have stretched the asking price and need to adjust the asking price to secure success, the longer the wait, the slower the market will become. 

Active Listings

The inventory grew by 7% in the past couple of weeks. 

The active listing inventory increased by 264 homes in the past two weeks, up 7%, and now sits at 3,945, its highest level since August 2022. The inventory just surpassed last year’s 3,695 September peak. The inventory is growing much faster this year because many more homes are coming on the market compared to the previous couple of years. Yet, demand has remained muted at very similar year-over-year levels. There were 1,326 additional FOR SALE signs from January through March compared to last year, 20% extra. Compared to two years ago, there were 2,198 more signs, 39% extra. These extra homes on the market are accumulating fast and are responsible for the week-to-week slowing in the housing market. This will continue through the Spring and Summer Markets. 

Last year, the inventory was at 2,184 homes, 45% lower, or 1,761 fewer. The 3-year average before COVID (2017 through 2019) was 5,780, an additional 1,835 homes, or 47% more. 

Homeowners continue to “hunker down” in their homes, unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. It became a crisis once rates skyrocketed in 2022. For March, 2,883 new sellers entered the market in Orange County, 1,025 fewer than the 3-year average before COVID (2017 to 2019), 26% less. Last March, there were 2,361 new sellers, 18% fewer than this year. More sellers are opting to sell compared to the previous couple of years.

Demand

Demand dropped by 3% in the past couple of weeks.  

Demand, a snapshot of the number of new pending sales over the prior month, decreased from 1,649 to 1,494 in the past couple of weeks, down 55 pending sales, or 3%. It appears as if demand peaked at 1,665 pending sales four weeks ago. Since demand has likely reached its annual peak, it will continue to fall slowly through the Spring and Summer markets. The recent reversal of mortgage rate momentum will not help. Mortgage rates were stuck above 7% from mid-December through mid-February. They then dropped to about 6.75% and remained there until the introduction of tariffs. Now mortgage rates are hovering around 7% again. Economic volatility and uncertainty have not been helping rates, eating into affordability and potential activity. For perspective, rates hit 7.5% three times last year. So even with the recent instability, year-over-year affordability has improved.

 As the Federal Reserve has indicated, watching all economic releases for signs of slowing is essential. That is the only path to lower mortgage rates right now. These releases can move mortgage rates higher or lower, depending on how they compare to market expectations. This Wednesday, Retail Sales will be released. Next week, the S&P Global Manufacturing and Services PMI will be released on Wednesday. Future tariff announcements could impact rates as well. 

Last year, demand was 1,615, with 21 additional pending sales or 1% more. The 3-year average before COVID (2017 to 2019) was 2,777 pending sales, 74% more than today, or an additional 1,183.

Expected Market Time

The Expected Market Time slowed by a week.   

With supply of available homes rising by 264 homes, up 7%, and demand falling by 55 pending sales, down 3%, the Expected Market Time (the number of days it takes to sell all Orange County listings at the current buying pace) increased from 67 to 74 days in the past couple of weeks. It is the slowest reading since mid-January’s 84 days. Last year, it was 41 days, substantially faster than today. The 3-year average before COVID was 62 days, which is also quicker than today. The previous reading above 84 days at the start of April occurred during the COVID lockdowns in 2020, when it reached a peak for that year at 121 days. 

Luxury End

The luxury market slowed substantially in the past couple of weeks. 

The luxury inventory of homes priced above $2.5 million (the top 10% of the Orange County housing market) increased from 1,038 to 1,106 homes, up 68 or 7%. Luxury demand decreased by 26 pending sales, down a considerable 14%, and now sits at 162, its lowest level since the end of January. The Expected Market Time for luxury homes priced above $2.5 million jumped from 166 to 180 days. It was at 141 at the end of February. Wall Street’s continued volatility has impacted Orange County’s luxury market. 

In the past two weeks, the Expected Market Time for homes priced between $2.5 million and $4 million increased from 133 to 155 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 150 to 200 days. For homes priced above $6 million, the Expected Market Time increased from 311 to 446 days. At 446 days, a seller would be looking at placing their home into escrow around July 2026.   

Orange County Housing Summary

• INVENTORY: The active listing inventory in the past couple of weeks increased by 264 homes, up 7%, and now sits at 3,945, its highest level since August 2022. In March, 26% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,025 less. Yet, 522 more sellers came on the market this March compared to March 2024. Last year, there were 2,184 homes on the market, 1,761 fewer homes, or 45% less. The 3-year average before COVID (2017 to 2019) was 5,780, or 47% extra.
• DEMAND: Buyer demand, the number of pending sales over the prior month, decreased by 55 pending sales in the past two weeks, down 3%, and now totals 1,594, its second lowest April reading since tracking began in 2004. Last year, there were 1,615 pending sales, 1% more. The 3-year average before COVID (2017 to 2019) was 2,777, or 74% more.
• MARKET TIME: With supply surging higher and demand down, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, climbed from 67 to 74 days in the past couple of weeks, its slowest pace since mid-January’s 84 days. Last year, it was 41 days, substantially faster than today. The 3-year average before COVID (2017 to 2019) was 62 days, which is also quicker than today.
• LUXURY: In the past two weeks, the Expected Market Time for homes priced between $2.5 million and $4 million increased from 133 to 155 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 150 to 200 days. For homes priced above $6 million, the Expected Market Time increased from 311 to 446 days.
• DISTRESSED HOMES: Short sales and foreclosures combined, comprised only 0.2% of all listings and 0.2% of demand. Only four foreclosures and one short sale are available today in Orange County, with five total distressed homes on the active market, unchanged from two weeks ago. Last year, ten distressed homes were on the market, similar to today.
• CLOSED SALES: There were 1,801 closed residential resales in March, up 1% compared to March 2024’s 1,785 and 23% from February 2025. The sales-to-list price ratio was 99.4% for Orange County. Foreclosures accounted for 0.2% of all closed sales, and there were no short sales. That means that 99.8% of all sales were sellers with equity.