Orange County Real Estate
It’s Just a Matter of Time Before More Homes Hit the Market
Active Inventory: The drop in inventory continues.
The inventory sits at an unprecedentedly low level and still managed to shed an additional 54 homes in the past two weeks. It now totals 3,183 a year ago the inventory was at 6,943 homes so obviously at some point we have to see an increase in available inventory.
The inventory is off to such an anemic start because the number of short sales and foreclosures coming on the market thus far this year has plummeted compared to 2012. The numbers are staggering. Short sales and foreclosures placed on the market are down 63% compared to the same time period last year. That translates to 2,035 fewer distressed sales on the market.
With very little on the market and demand through the roof, home values are appreciating rapidly. Many feel that the swift appreciation is too fast too soon (we have all seen that before). However the housing market dropped nearly 40% in value so it has a lot of ground to make up. Many homeowners sat on the sideline and watched their equity positions drop significantly & now don’t want to make a move until they can do so at a profit.
As more homeowners realize they have already achieved massive appreciation & again have positive equity, more homes will be placed onto the market. At the present pace of sales, hot demand and low inventory, there is a strong chance that everybody will collectively figure it out this summer. Which should lead to a lot more activity over the next few months. We don’t know if the available inventory will be enough to meet the high level of demand, but it should be a lot better than what we have been seeing over the past few months.
Demand: Remains strong.
Demand remains strong & should increase as the summer gets closer as long as lending rates and terms don’t change dramatically. There is a massive pent up demand right now for homes, with buyers chasing every new listing and writing offers sight unseen over asking price because they have gotten use to competing with a dozen other offers on every house they like.
Distressed Breakdown: almost a nonissue now.
Only 7% of the active listing inventory is distressed compared to last year when it represented 29% of the inventory. The market is in transition, moving away from distressed sales having such a tremendous impact on housing and back to regular equity sales. As prices continue to climb expect distressed properties to be less and less of the active inventory.