THE 10-YEAR DROUGHT
Fewer homeowners selling despite record-level appreciation
|
|
Source: Steven Thomas - Orange County Housing Report
The lack of supply and years of red-hot demand, juiced by historically low interest rates, has resulted in homes appreciating to record levels in Orange County, erasing the losses and sting of the Great Recession. This 10-year old trend is now the norm. Homeowners are simply not moving as often as they used to. It has caused a drought in the supply of available homes for buyers to purchase.
There are numerous reasons that homeowners in Orange County and across the nation are opting to stay put. After feeling the burn from the Great Recession, many are turning their homes into “Forever Homes.” A majority of homeowners have refinanced to historically low interest rates, some as low as the mid-threes, making moving a lot more challenging as rates rise. Most baby boomers plan on staying put instead of downsizing after retirement, not moving like many had originally forecasted. They have been selling at a much slower pace than prior generations, which could be due to a longer life expectancy and a healthier lifestyle. In addition, builders have not been building homes, especially in the lower ranges, like they did in prior decades. All of these factors combined have contributed to the low turnover rate in the housing stock.
Currently, the active inventory is at its highest level since 2012. That is not because suddenly homeowners are finally deciding to sell at a faster pace. In fact, the number of homeowners coming on the market is slightly less so far this year. Instead, the higher inventory is due to muted demand, a result of interest rates in the mid-4’s.
In the past two weeks, the active listing inventory increased by 3%. It is not rising that rapidly because demand has increased tremendously in recent weeks while the number of homeowners opting to sell is a bit subdued. So far this year, 5% fewer homeowners have opted to sell compared to 2018. From here, expect the inventory to slowly rise until it starts picking up momentum at the end of March.
Last year at this time there were 4,178 homes on the market, this year there are 6,309. That means that there are 51% more homes available today. This is the highest level of homes on the market for this time of the year since 2012.
Demand typically ramps up through the month of February as it prepares for the best time of the year, in terms of pending sales activity, springtime. Comparing January 1 to today, demand has increased by 79%, even stronger than last year’s 69% rise. Part of demands resurgence is due to interest rates falling to 4.35% last week. Back in November, rates almost reached 5%. The retreat has helped demand considerably.
The current Expected Market Time dropped from 102 days to 90 days in the past two weeks, a Balanced Market (between 90 and 120 days) and is knocking on the door of a slight Seller’s Market. It is still the highest for this time of the year since 2011. Last year, the Expected Market Time was at 51 days, a HOT Seller’s Market.
|
|
NEW LISTINGS
Laguna Beach & San Clemente Dream Condos!
|
|
21773 Ocean Vista, Laguna Beach
Offered at: $1,350,000
2bd, 2ba, 1524 sqft |
|
228 Marquita #2, San Clemente
Offered at: $1,099,000
2bd, 2ba, 1650 sqft
|
|
NEWLY IN ESCROW
Arch Beach Heights
|
|
934 La Mirada St, Laguna Beach
List Price: $1,575,000
3bd, 2ba, 1734 sqft
|
|
CURRENT LISTINGS
Laguna Beach
|
|
MARKET STATISTICS
Laguna Beach
|
|
Active - 256
Pending - 51
Sold in February - 16
Under $1,000,000 - 1
$1,000,000 - $2,000,000 - 7
$2,000,000 - $3,000,000 - 6
$3,000,000 - $4,000,000 - 1
$8,298,625 - 1
|
|
|
|
