Orange County Housing Report | 10 Year Drought
Ever since the Great Recession, far fewer homeowners have been selling their homes annually, a trend that is not going away.
Lack of Sellers: Fewer homeowners are opting to sell in spite of homes appreciating to record levels.
Millions flock to the Hawaiian Islands to escape the grind of everyday life and bask in the tropical sun and warm waters. After relaxing for hours on the sand and swimming in the aqua blue surf, so many vacationers forget to reapply sunscreen. Upon returning to the hotel room, the inevitable has occurred. Looking in the mirror they confirm they have a lobster red sunburn from head to toe. Nearly everybody has experienced the pain of a deep sunburn. It is hard to sleep, hard to take showers, and hard to go back out in the sunshine again. The pain is a reminder to never forget to reapply sunscreen again.
Similarly, homeowners across the nation watched the housing market take a pounding during the Great Recession as their equity vanished in a blink. Many lost their homes to short sales or foreclosures. Everybody either personally got stung by the correction or knew of somebody who did. As a result, a new trend emerged to avoid a lobster red burn in the future: homeowners stay in their homes a lot longer. There are far fewer homeowners who opt to sell every year. Even with record home values, the trend continues.
Orange County Housing Market Summary:
The active listing inventory increased by 194 homes in the past two weeks, up 3%, and now totals 6,294. Last year, there were 4,178 homes on the market, 2,116 fewer than today. There are 51% more homes than last year.
In January, 2% fewer homes came on the market below $500,000 compared to 2018, and there were 19% fewer closed sales. Fewer and fewer homes and condominiums are now priced below $500,000. This price range is continuing to vanish.
Demand, the number of pending sales over the prior month, continued its rapidly rise in the past two-weeks, climbing by 297 pending sales, up 17%, and now totals 2,088, its lowest level for this time of the year since 2008. Last year, there were 2,441 pending sales, 17% more than today.
The Expected Market Time for all of Orange County decreased from 102 days two weeks ago to 90 days today, a Balanced Market (between 90 to 120 days) and the highest level for this time of the year since 2011. It was at 51 days last year.
For homes priced below $750,000, the market is a slight Seller’s Market (between 60 and 90 days) with an expected market time of 72 days. This range represents 44% of the active inventory and 55% of demand.
For homes priced between $1 million to $1.25 million, the expected market time is 96 days, a Balanced Market.
For luxury homes priced between $1.25 million and $1.5 million, in the past two weeks, the expected market time decreased from 144 to 132 days. For homes priced between $1.5 million and $2 million, the expected market time decreased from 209 to 173 days. For luxury homes priced between $2 million and $4 million, the expected market time decreased from 241 to 234 days. For luxury homes priced above $4 million, the expected market time decreased from 582 to 573 days.
The luxury end, all homes above $1.25 million, accounts for 31% of the inventory and only 14% of demand.
Distressed homes, both short sales and foreclosures combined, made up only 0.9% of all listings and 1.3% of demand. There are only 21 foreclosures and 37 short sales available to purchase today in all of Orange County, 58 total distressed homes on the active market, down one from two-weeks ago. Last year there were 40 total distressed homes on the market, slightly less than today.
There were 1,461 closed residential resales in January, 19% fewer than January 2018’s 1,800 closed sales. January marked an 18% drop from December 2018. The sales to list price ratio was 96.7% for all of Orange County. Foreclosures accounted for just 0.8% of all closed sales, and short sales accounted for 0.6%. That means that 98.6% of all sales were good ol’ fashioned sellers with equity.
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