Ever since the Great Recession, far fewer homeowners have been selling their homes annually, and now even fewer are opting to participate in selling their homes.
Lack of Sellers: Fewer homeowners are opting to sell despite homes appreciating to record levels.
Homeowners across the nation watched the housing market take a brutal pounding during the Great Recession as their equity vanished in a blink. Many lost their homes to foreclosures or short sales. Everybody was either personally burned or they knew somebody who experienced the painful sting of the downturn. As a result, a new trend emerged to avoid that lobster red burn with staying power: homeowners remain in their homes for a lot longer. They are content in keeping their home. There are fewer homeowners who opt to sell every year, and even with record home values, the trend continues.
The lack of supply and years of red-hot demand, juiced by record low interest rates (especially since the start of the COVID-19 pandemic), has resulted in homes appreciating to record levels in Orange County, erasing the losses and sting of the Great Recession entirely. This more than a decade long trend is now the norm. Homeowners are not moving as often as they used to.
Buyers must understand that the low turnover rate in the housing stock is here to stay. The pandemic did not help the issue either. This trend is here to stay, which means that the anemic inventory is not going to change much for the rest of the year and into 2022 as well. Most homeowners are simply content with staying put. As a buyer, waiting for a lot more choices is futile. Buyers that opt to wait will be kicking themselves down the road. Instead, cashing in on today’s historically low rates now is the right move. The housing market has the legs to continue at its current trajectory for quite some time.
Orange County Housing Market Summary:
- The active listing inventory increased by 9 homes in the past two-weeks, nearly unchanged, and now totals 2,537, its highest level since January. In June, there were 12% fewer homes that came on the market compared to 5-year average between 2015 to 2019 (2020 was skewed do to COVID-19), 476 less. Last year, there were 4,590 homes on the market, 2,053 additional homes, or 81% more.
- Demand, the number of pending sales over the prior month, increased by 51 pending sales in the past two-weeks, up 2%, and now totals 2,812. Last year, there were 3,200 pending sales, 14% more than today, due to a delayed Spring Market.
- With a slight increase in the supply and an increase in demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, remained unchanged at 27 days in the past couple of weeks, its highest level since February, but still an extremely Hot Seller’s Market (less than 60 days). It was at 43 days last year and getting hotter.
- For homes priced below $750,000, the market is a Hot Seller’s Market (less than 60 days) with an Expected Market Time of 20 days. This range represents 28% of the active inventory and 37% of demand.
- For homes priced between $750,000 and $1 million, the Expected Market Time is 23 days, a Hot Seller’s Market. This range represents 22% of the active inventory and 26% of demand.
- For homes priced between $1 million to $1.25 million, the Expected Market Time is 23 days, a Hot Seller’s Market. This range represents 20% of the active inventory and 12% of demand.
- For homes priced between $1.25 million to $1.5 million, the Expected Market Time is 28 days, a Hot Seller’s Market. This range represents 9% of the active inventory and 9% of demand.
- For homes priced between $1.5 million and $2 million, the Expected Market Time decreased from 30 to 28 days. For homes priced between $2 million and $4 million, the Expected Market Time remained unchanged at 55 days. For homes priced above $4 million, the Expected Market Time decreased from 168 to 131 days.
- The luxury end, all homes above $1.5 million, accounts for 31% of the inventory and 15% of demand.
- Distressed homes, both short sales and foreclosures combined, made up only 0.5% of all listings and 0.4% of demand. There are only 7 foreclosures and 5 short sales available to purchase today in all of Orange County, 12 total distressed homes on the active market, up 5 from two-weeks ago. Last year there were 25 total distressed homes on the market, slightly more than today.
- There were 3,545 closed residential resales in June, 63% more than June 2020’s 2,169 closed sales. June marked a 10% increase compared to May 2021. The sales to list price ratio was 101.4% for all of Orange County. Foreclosures accounted for just 0.1% of all closed sales, and short sales accounted for 0.1%. That means that 99.8% of all sales were good ol’ fashioned sellers with equity.
To request to read/download the full report and charts, please email [email protected].