After starting the year with a record low number of available homes to purchase, the inventory did not increase like it typically does, and ultimately plunged to new record lows.
With fewer homes coming on the market and soaring demand, the active listing inventory reached record low levels. It dipped below 3,000 homes for the first time ever at the end of 2020. It then dropped below 2,000 homes at the end of October. The inventory is poised to drop below 1,000 upon ringing in the New Year.
The “supply problem” that everybody talks about is due to heightened buyer demand fueled by historically low mortgage rates matched with an inventory that was already trending lower prior to COVID. The inventory crisis is so acute that it has limited the number of closed sales in Orange County. There is plenty of excess demand from buyers unable to isolate a home to purchase.
At the beginning of the year, demand for Orange County homes (the number of pending sales over the prior month) was up 32% compared to the start of 2020, prior to COVID impacting housing. Demand was at the hottest levels since 2013 for the first six-months of the year but dropped below 2020 readings by the end of June.
True demand is a lot higher yet is impossible to gauge. The throngs of showings for just about every home that hits the market combined with the sheer volume of multiple offers generated illustrates that there is a vast pool of buyers looking to secure a home.