Orange County Housing Report: More Homes Coming

Jeanette’s Insights

It’s almost Springtime, you know what that means, people start to consider moving between April and August. If you are a seller, you may want to beat the competitive rush. If you are a buyer, you will have more homes available to choose from! Call me to learn how I set you up for success, it’s all in the initial consultation, building a strong foundation!

March 3, 2021
In a couple of weeks spring will arrive and that is
When more homeowners place their homes on the
market than any other time of the year.

By: Steven Thomas

New FOR-SALE Signs
Nearly a third of all homes that enter the fray during the year come
on the market over the course of the next three months.

The birds are singing their sweet songs as they busily build their nests. Deciduous trees are covered with new buds that will soon burst with leaves. The days are starting to get longer and warmer, inviting everyone to sit on their porches and lounge in a little extra evening sunshine. Spring is just about here, less than two weeks away, the beginning of housing’s Spring Market.

Spring is not only a season of flower blossoms, butterflies, and new life, it is a time when more real estate activity occurs than any other time of the year. It is when the inventory rises and demand surges and peaks. Many mistaken the summer as the best time of the year for real estate, but it is second to spring. During the spring, more homes are listed, there are more new escrows, and there are more closed sales than any other season.

The spring of 2021 will be no different. The issue right now is that there are simply not enough homes available to satisfy today’s insatiable buyer’s demand. With only 2,366 homes on the market, the lowest level since tracking began in 2004, it is as if the family car’s low fuel light is “on” and everyone crosses their fingers and toes that there are enough fumes in the gas tank to safely arrive at the closest gas station. There are 43% fewer homes available to purchase compared to last year’s 4,161 homes to start March. That is 1,795 fewer FOR-SALE signs. Making matters worse, there were 447 fewer homes placed on the market in January and February compared to the prior 5-year average, 7% fewer. While that may not seem like a lot, ask any buyer if they want to see more homes placed on the market. At this point, every additional home is a welcome relief.

The big question right now is “when are there going to be more homes coming on the market, and how many?” In analyzing the data, it starts in March, the beginning of spring. An elevated number of homes hit the market from March through July, peaking in May. According to the 5-year average, the difference between March and May is only 216 homes, 5%, while the difference between February and March is 744 homes. On average, there are 23% more homes in March compared to February. Everyone can be rest assured that the welcome sight of more homes entering the fray has finally arrived and will remain at nearly the same elevated level through July.

The 5-year average is taken from the years 2015 through 2019 because 2020’s numbers were heavily skewed due to the pandemic. Comparing any data to last year in real estate will not be helpful from right now until the end of the year. It is better to look at an average of data from prior years.

Today’s ultra-low active listing inventory is due to surging demand that started last year as mortgage rates continued to descend to uncharted levels. From the start of the pandemic to the first week of January rates reached 17 record lows. Soaring demand is the largest contributing factor to today’s anemic supply of available homes. Further exasperating the situation is that the fewest number of homes to come on the market from October through January. Buyers who were swarming listed homes at the end of 2020 were not getting much help from homeowners. More homeowners skip the months of November and December, the Holiday Market, than any other
time of the year. For perspective, there are 63% fewer new FOR-SALE signs in December compared to May.

The Bottom Line: Finally, more homes will come on the market starting this month, and the spigot will remain fully opened through July. More homeowners assert that they will list their home during the spring than any other time of the year. The numbers support what they say, and with the pandemic waning, this year will be no different. Everyone is acutely aware that the housing market is the hottest sector of the economy and many homeowners will be lured to taking advantage of this incredible market. They will not want to miss out on one of the strongest markets in years.

Call me to discuss what the report and graphs mean to you!
Remember, I love questions!