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Housing Report 2021-07-26-Permanently Parked

Posted by Calvin Nguyen on July 28, 2021
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Lack of Sellers

Fewer homeowners are opting to sell despite homes appreciating to record levels.

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.

Based upon 2020 closed sales, the turnover rate for the Orange County’s housing stock is once every 24 years, down slightly from 2019’s once every 25 years. It has bounced between 20 years and 25 years for the past decade. Remarkably, only 4.1% of all homeowners opted to sell their homes last year.

COVID-19 intensified the trend of fewer homeowners opting to sell. Last year in Orange County, 6% fewer homes were placed on the market compared to the prior 5-year average from 2015 to 2019. That translates to 2,535 missing FORSALE signs. That paved the way to 2021’s lowest active listing inventory since tracking began in 2004. Today, it is not COVID that is keeping homeowners from selling, it is the lack of replacement homes after selling. Many are pointing to the fact that if they sell there will be “nothing to buy,” limiting the number of homeowners willing to participate in a market with such an anemic level of available homes to purchase. In the first half of 2021, 8% fewer homes were placed on the market compared to the 5-year average from 2015 to 2019 (intentionally excluding 2020 due to COVID skewing the data), 1,829 fewer FOR-SALE signs.

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.

Click on the image below the Read the Orange County Housing Report.





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