The lack of homes for sale in Orange County has hit pending sales activity.
Supply Cuts Pending Sales: The number of pending sales over the past month dropped by 7% due to a supply of homes that is now dropping as well.
Homeowners have been behaving differently ever since the Great Recession began a decade ago. A trend evolved and it has not changed since 2008. That trend is a drought of homeowners opting to sell their homes. In fact, this year it has been even more pronounced.
The number of homes placed on the market this year is the second lowest level this century behind 2012. The lack of homes FOR SALE back then was understandable as home values were only starting to rise and many homeowners were upside down in their homes, owing more than their homes were worth. Flash forward five years later to today and home values have appreciated substantially (the median value of a resale home has increased by more than 60%). Even with the extra equity, homeowners are opting to stay put and are not moving. The trend continues.
This year, there have been 7% fewer homes that have come on the market compared to last year, 2,055 fewer to be exact. For perspective, there have been 18,000 fewer FOR SALE signs this year compared to 2004. This lack of inventory has hurt the true potential for closed sales. With interest rates below 4%, buyers have been chomping at the bit to purchase; yet, they face stiff competition due to a lack of supply.Today there are 20% fewer choices on the market compared to last year, 5,639 versus 7,040. As a result, the number of pending sales over the prior month (how Reports On Housing gauges demand), dropped in the past couple of weeks by 7%, with 201 fewer pending sales, now totaling 2,624. Today’s demand is 3% off of last year’s 2,719. The lack of supply is truly cutting into the number of pending sales and has undercut demand.