Orange County Housing Report: Seize the Day
June 15, 2020 / By Steven Thomas
Lack of Supply: From March through today, one-third fewer homes were placed on the market.
For many Southern Californians, this is the time of year to flock to the beach. The warmth of the sand, the tranquil sounds of waves crashing, and a refreshing dip in the surf are an invitation that beckons Cali residents to come and relax. There are times when a decision is made not to go because of the fear that the beach is overcast and the ocean waters are too cold, also known as “June gloom.” For many, it is disheartening to find out later that the shores were sunny and the water was perfect, a missed opportunity for a wonderful day on the sand.
Similarly, many homeowners think that now is not a good time to sell because of COVID-19, that “June gloom” has shrouded the Orange County housing market due to the virus. With reports calling for prices to drop, many have come to believe that the market favors buyers and that it is exceedingly difficult to sell. After all, how can you sell a home in this environment, in the midst of a pandemic? These homeowners have their wires crossed and they could not be further from the truth.
Today’s Orange County market is a Hot Seller’s Market with an Expected Market Time (the amount of time between hammering in the FOR-SALE sign to opening escrow) of only 59 days. It is the hottest June since 2013. As far as the housing market is concerned, it is sunny and the water is perfect, a missed opportunity for those homeowners who think otherwise.
What is at issue is supply and demand. Demand, the number of pending sales over the prior 30-days, has increased from inherent levels in mid-April, lows last seen during the Great Recession, back to high levels last experienced at the beginning of March, just prior to the COVID-19 “Stay at Home” order. The all-time record low mortgage rates at 3% are stoking the fires of demand. And, the active listing inventory, supply, is at its lowest level for a June since 2013, currently at 4,950 homes. Last year there were 51% more homes on the market totaling 7,493. With an ultra-anemic supply and unbelievably strong demand, the overall housing market is hot.
COVID-19 is no longer affecting demand. Demand is pumping on all cylinders. On the other hand, COVID-19 still has a grip on supply, preventing many from placing their homes on the market.
It makes sense that homeowners opted to not sell at the beginning of the virus lockdown. There was so much uncertainty and fear, which is why COVID-19 affected both supply and demand. But, as the lockdown wore on and Californians moved towards reopening the economy, demand returned, instigated by record low rates. The real estate industry has adapted to the virus as well. Documents have been created by the California Association of REALTORS® to properly inform and protect buyers and sellers. Real estate agents are showing homes utilizing masks, gloves, and proper social distancing. The real estate industry is fully operational again, except for the number of homes coming on the market.
Quite simply, there just are not enough homes on the market to satiate the recent spike in demand.
So, yes, the housing market can be strong in the midst of a recession. Demand is flourishing under the current record low mortgage rate environment. It is time for sellers to enter the arena as well. It is time for sellers to seize the day.
Active Inventory: The current active inventory decreased by 2% in the past two-weeks.
Demand: In the past two-weeks demand continued to surge, increasing by 24%.
Luxury End: The luxury demand continues to soar higher.