Active Inventory – A Record Low: After reaching a low not seen in more than seven years, the inventory dropped further.
The Orange County active inventory shed an additional 210 homes in the past two weeks, an unprecedented 4% drop for this time of year, and now totals 4,676. It is extraordinary because there is almost nothing on the market. Ask any seasoned buyer and they will fill you in on their real estate adventures. They have written offer after offer after offer, only to be told again and again that their offer was not good enough. There simply are not enough homes to go around.
Last year at this time there were 10,556 homes on the market, more than double. The active inventory stood at 8,114 homes at the beginning of the year, 3,438 more than today.
Typically during this time of year, unrealistic homeowners that were unable to sell during the best time of the year, both the Spring and Summer markets, opt to throw in the towel and pull their homes off of the market. But, with such a limited inventory, expect fewer homes to venture down this path. The listing inventory will hit a bottom eventually. It should be soon; however, this year has been the year of unconventional wisdom.
Demand: The Autumn Market is here, along with another drop in demand.
The Summer Market is now in the rear view mirror. It has been replaced with the changing of the leaves, the structure of school, and, very soon, the howls of “trick or treat.” Typical for this time of year, there is a slight deceleration in demand, the number of pending sales over the prior month. In the past month, demand has dropped by 6%, 214 pending sales, and now sits at 3,330. Last year at this time there were 385 fewer pending sales, a 13% difference. Of course, if more homes were placed on the market, buyers that have been anxiously waiting for an increase in fresh inventory would finally be able to purchase. Today’s sparse inventory is actually hurting demand. There are plenty of willing and able buyers, just not enough homes.
Steven Thomas
Quantitative Economics and Decision Sciences
