The active inventory has been running on empty all year long. There are fumes left in Orange County’s housing market tank. The inventory hit an all time low in June at 2,214 available homes to purchase. It then dropped below that record low at the end of September and has been falling ever since. In fact, it has shed 1,071 homes in the past three months, down an astonishing 42%. In just the past two weeks alone, the inventory plunged by 19%, or 336 homes, the largest drop of the year, and now totals 1,457, signaling the start to the Holiday Market when both supply and demand sink to their lowest point by New Year’s Day.
Today’s inventory level really is a catastrophe because, given current trends, it appears as if there is no change in site. It is not as if inventory levels will suddenly rise and cool the market. There are a couple of factors that have exacerbated the predicament. The three years prior to COVID, 2017 through 2019, there were fewer homes placed on the market compared to prior years. Building an inventory was already challenging prior to the pandemic. When the pandemic hit, fewer homeowners opted to sell. In 2020, through October, there were 2,545 missing FOR-SALE signs compared to that 3-year average, 7% less. In 2021, through October, there have been 2,245 missing signs, 6% less. That may not seem like that many for a year, but at this point every single missing FOR-SALE sign further intensifies the inventory plight.
Further contributing to demand, there are more potential buyers reaching the prime first-time buying age of 32 years old than ever before, millennials. It started last year, this year is even stronger, and it continues for the next several years. It is the strongest first-time home buyer demographic patch on record, and it is occurring right now. Millennials are doing what humans do. They are leaving the family home or the multiple roommate situation, getting married, and having babies. Millenials want a piece of the proverbial “American Dream” just like every generation prior. They are adding pressure to the demand side of the equation for housing.
The Bottom Line: The supply of available homes to purchase is at an all-time low.
The inventory gauge is pointing to “EMPTY”, and it does not look like there will be much relief anytime soon. The Orange County housing market has only grown stronger over the past few months and has been at an insane level since August of last year. Do not expect anything less than insane for quite some time.
