HYPE VS DATA

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The best advice in hearing all the talk swirling around the belief that a real estate crash lurks around the corner is to ignore the noise and stick to the facts.

 

The active inventory in Orange County is at its lowest level in May since tracking began in 2004. Housing is experiencing a crisis, a catastrophically low level of available homes. During the Great Recession, a glut of homes was on the market. Today, the market suffers from the opposite condition: a minimal supply. For housing to tip in the buyer’s direction, the inventory needs to rise at the very least to pre-pandemic levels. The 5-year average peak from 2015 to 2019 was 7,058 homes. There are only 2,139 homes available today. Last year, the inventory grew substantially from April through August, peaking at 4,069 homes. It stopped climbing due to a lack of sellers coming on the market. The inventory is not poised to rise anywhere near 7,000 homes anytime soon.

 

The bottom line: facts and data do not lie. Buyer, seller, and all consumer expectations should be grounded in facts, not the hype of social media channels continuously pushing false narratives. Today’s housing market is hot and will not change much anytime soon. There is no crash in sight.

 

 

 

• The active listing inventory in the past couple of weeks increased by 63 homes, up 3%, and now sits at 2,139, the largest rise of the year. Nonetheless, it is the lowest level for mid-May since tracking began in 2004. In April, 49% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,983 less. Last year, there were 2,452 homes on the market, 313 more homes, or 15% higher. The 3-year average before COVID (2017 to 2019) was 6,255, or 192% more, nearly triple.
• Demand, the number of pending sales over the prior month, decreased by 46 pending sales in the past two weeks, down 3%, and now totals 1,660, the lowest mid-May reading since 2020 during the COVID lockdown. Last year, there were 2,179 pending sales, 31% more than today. The 3-year average before COVID (2017 to 2019) was 2,765, or 67% more.
• With the inventory rising and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 37 to 39 days in the past couple of weeks. It was 34 days last year, similar to today.
• For homes priced below $750,000, the Expected Market Time decreased from 27 to 26 days. This range represents 19% of the active inventory and 28% of demand.
• For homes priced between $750,000 and $1 million, the Expected Market Time increased from 23 to 25 days. This range represents 15% of the active inventory and 24% of demand.
• For homes priced between $1 million to $1.25 million, the Expected Market Time increased from 23 to 26 days. This range represents 10% of the active inventory and 14% of demand.
• For homes priced between $1.25 million to $1.5 million, the Expected Market Time increased from 32 to 34 days. This range represents 10% of the active inventory and 11% of demand.
• For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 46 to 47 days. This range represents 13% of the active inventory and 11% of demand.
• For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 72 to 81 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 116 to 113 days. For homes priced above $6 million, the Expected Market Time increased from 353 to 368 days.
• The luxury end, all homes above $2 million, account for 33% of the inventory and 12% of demand.
• Distressed homes, both short sales and foreclosures combined, comprised only 0.5% of all listings and 0.3% of demand. Only three foreclosures and seven short sales are available today in Orange County, with ten total distressed homes on the active market, down two from two weeks ago. Last year there were three distressed homes on the market, similar to today.