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The high mortgage rate environment has prevented many homeowners from selling their homes, and the trend has only deepened this year. From January through April, there were 46% fewer sellers than the average before COVID, more than 6,500 missing FOR-SALE signs.
Based on the first four months of 2023, it is projected that there will be 18,100 missing sellers. Many homeowners would like to move for various reasons yet are staying put and enjoying their low fixed monthly payments. Their home may not be exactly what they desire, but they love their current loan.
Many ask when more sellers will opt to place their homes on the market and finally sell. That will occur when mortgage rates drop to 5.5% or lower. The gap between many homeowners’ prevailing underlying fixed rates will eventually narrow enough to entice many to list their homes for sale. That is when the need to move will kick in. The need for a growing family to purchase a larger home. The need for empty nesters to downsize. The need to move closer to the kids. While many are already selling today, lower rates will bridge the gap, and the number of sellers will grow. Until then, the 2023 inventory will continue to be constrained.
The active listing inventory increased by 23 homes in the past two weeks, up 1%, and now sits at 2,076 homes. Even with the slight rise, fewer homes are on the market than last year.
What we're seeing:
→ Demand on the rise
→ Hot market for areas with houses under 1 mil
→ 18,100 less homes in OC than previous years
→ Buyers still looking
→ Days on market short for high end
→ Sales volume is down
What we can expect:
→ Decline in inventory through summer
→ Not a lot of change
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 34 homes, up 1%, and now sits at 2,076, this first substantial rise of the year. Nonetheless, it is the lowest level at the end of April since tracking began in 2004. In April, 49% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,983 less. Last year, there were 2,104 homes on the market, 28 more homes, or 1% higher. The 3-year average before COVID (2017 to 2019) was 6,002, or 189% more.
- Demand, the number of pending sales over the prior month, increased by 43 pending sales in the past two weeks, up 3%, and now totals 1,706, the lowest end-of-April reading since 2020 during the COVID lockdown. Last year, there were 2,154 pending sales, 26% more than today. The 3-year average before COVID (2017 to 2019) was 2,780, or 63% more.
- With the inventory and demand rising at a similar rate, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, remained unchanged at 37 days in the past couple of weeks, its lowest level since May of last year. It was 29 days last year, slightly better than today.
- For homes priced below $750,000, the Expected Market Time remained unchanged at 27 days. This range represents 21% of the active inventory and 28% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time increased from 22 to 23 days. This range represents 15% of the active inventory and 24% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time decreased from 27 to 23 days. This range represents 9% of the active inventory and 15% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time increased from 30 to 32 days. This range represents 9% of the active inventory and 10% of demand.
- For homes priced between $1.5 million to $2 million, the Expected Market Time decreased from 52 to 46 days. This range represents 13% of the active inventory and 10% of demand.
- For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks remained unchanged at 72 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 212 to 116 days. For homes priced above $6 million, the Expected Market Time increased from 341 to 353 days.
- The luxury end, all homes above $2 million, account for 33% of the inventory and 12% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.6% of all listings and 0.3% of demand. Only five foreclosures and seven short sales are available today in Orange County, with 12 total distressed homes on the active market, up two from two weeks ago. Last year there were four distressed home on the market, similar to today.