Inventory Running on Empty: The inventory is at an all-time low and it is only going to drop from here.
The active inventory has been running on empty all year long. There are fumes left in Orange County’s housing market tank. The inventory hit an all time low in June at 2,214 available homes to purchase. It then dropped below that record low at the end of September and has been falling ever since. In fact, it has shed 1,071 homes in the past three months, down an astonishing 42%. In just the past two weeks alone, the inventory plunged by 19%, or 336 homes, the largest drop of the year, and now totals 1,457, signaling the start to the Holiday Market when both supply and demand sink to their lowest point by New Year’s Day.
It is challenging to articulate just how dire the current inventory levels are today. In looking at supply and demand, when there is a very limited supply that is matched with insatiable, strong demand, the supply issue not only persists, but it can also become even more severe. That is precisely what has occurred in 2021. It has dropped to an unprecedented point.
Prior to COVID, from 2017 to 2019, the inventory averaged 5,851 homes. In 2020, it averaged 4,188, 28% less, and this year it is at 2,190 homes, 63% less. That is correct, it has averaged less than 2,200 homes. Last year’s 3,469 homes to end November was the lowest reading by far since tracking began 17 years ago. Today’s 1,457 inventory is 58% lower, less than half. The 3-year average prior to COVID for the end of November is 5,359, a jaw dropping 238% more, an extra 3,902 available homes, more than triple. That is a big difference, indicating just how starved the housing market is for inventory.
Orange County Housing Market Summary:
- The active listing inventory shed 336 homes in the past two weeks, plunging 19%, and now totals 1,457 homes, its lowest level since tracking and its largest drop of the year. In October, there were 15% fewer homes that came on the market compared to the 3-year average prior to COVID (2017 to 2019), 441 less. Last year, there were 3,469 homes on the market, 2,012 additional homes, or 138% more.
- Demand, the number of pending sales over the prior month, decreased by 101 pending sales in the past two weeks, down 4%, and now totals 2,221. Last year, there were 2,621 pending sales, 18% more than today due to a four-month delay in the Spring Market because of COVID.
- With the supply plunging compared to the smaller drop in demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, dropped from 23 to 20 days in the past couple of weeks, its lowest level on record and an extremely Hot Seller’s Market (less than 60 days). It was at 40 days last year, slower than today.
- For homes priced below $750,000, the market is a Hot Seller’s Market (less than 60 days) with an Expected Market Time of 16 days. This range represents 27% of the active inventory and 33% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 14 days, a Hot Seller’s Market. This range represents 20% of the active inventory and 28% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time is 13 days, a Hot Seller’s Market. This range represents 9% of the active inventory and 13% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 21 days, a Hot Seller’s Market. This range represents 8% of the active inventory and 8% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market decreased from 25 to 21 days. For homes priced between $2 million and $4 million, the Expected Market Time decreased from 42 to 39 days. For homes priced above $4 million, the Expected Market Time increased from 94 to 103 days.
- The luxury end, all homes above $1.5 million, accounts for 37% of the inventory and 18% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.5% of all listings and 0.3% of demand. There are only 4 foreclosures and 3 short sales available to purchase today in all of Orange County, 7 total distressed homes on the active market, down 3 from two weeks ago. Last year there were 7 total distressed homes on the market, same as today.
- There were 2,778 closed residential resales in October, 17% less than October 2020’s 3,359 closed sales. For the year, through October, there have been 30,097 closed sales, 23% higher than last year. September marked a 7% drop compared to September 2021. The sales to list price ratio was 100.5% for all of Orange County. Foreclosures accounted for just 0.29% of all closed sales, and short sales accounted for 0.04%. That means that 99.7% of all sales were good ol’ fashioned sellers with equity.
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