Busting Myths
Ignore all the consistently negative social media channels and stick to the facts and data.
Numerous myths have been circulating about the housing market, often propagated through social media channels and negative narratives peddled by unqualified voices. However, it's crucial to rely on facts and data rather than succumbing to doom and gloom stories. A widespread myth suggests that housing is trapped in an unsustainable bubble poised for an imminent crash. This couldn't be further from the truth - the current housing inventory remains significantly lower than the levels preceding the Great Recession, homeowner equity positions are robust, and lending standards have been tightened. Another pervasive myth claims that rising inventory levels mirror last year's situation, but data shows inventory has actually been increasing recently compared to the 2022 lows, albeit still below pre-pandemic levels.
Some additional myths assert that home prices will inevitably decline when mortgage rates fall, as more sellers will rush to list their properties. However, this fails to account for the corresponding boost in buyer purchasing power and affordability that lower rates provide, likely driving up demand to surpass any inventory gains. There are also claims that the uptick in unemployment will trigger a new foreclosure crisis, yet the current 3.9% unemployment rate remains historically low. Moreover, today's housing market operates under much stricter lending requirements compared to the subprime frenzy preceding the Great Recession. With the majority of owners holding significant home equity, the housing market displays resilience against moderate economic fluctuations. Overall, while challenges persist, many of the widely-circulated negative narratives lack substantiation from the available data and factual evidence.
Active Listings
The active listing inventory in the past couple of weeks increased by 150 homes, up 6%, and now sits at 2,620. In April, 32% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,272 less. 604 more sellers came on the market this April compared to April 2023. Last year, there were 2,190 homes on the market, 430 fewer homes, or 16% less. The 3-year average before COVID (2017 to 2019) was 6,370, or 143% extra, more than double.
Demand
Demand, the number of pending sales over the prior month, decreased by 109 pending sales in the past two weeks, down 6%, and now totals 1,650. Last year, there were 1,665 pending sales, 1% more. The 3-year average before COVID (2017 to 2019) was 2,738, or 66% more.
Orange County Housing Summary
- With supply 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 42 to 48 days in the past couple of weeks. It was 39 days last year, faster than today. The 3-year average before COVID (2017 to 2019) was 70 days, slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 increased from 31 to 39 days. This range represents 18% of the active inventory and 22% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million increased from 23 to 36 days. This range represents 15% of the active inventory and 20% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million decreased from 28 to 27 days. This range represents 8% of the active inventory and 14% of demand.
- The Expected Market Time for homes priced between $1.25 million and $1.5 million increased from 28 to 38 days. This range represents 10% of the active inventory and 13% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million decreased from 46 to 37 days. This range represents 12% of the active inventory and 15% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million increased from 66 to 76 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 167 to 154 days. For homes priced above $6 million, the Expected Market Time decreased from 413 to 384 days.
- The luxury end, all homes above $2 million, account for 37% of the inventory and 16% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.2% of all listings and 0.2% of demand. Only five foreclosures and one short sale are available today in Orange County, with six total distressed homes on the active market, up one from two weeks ago. Last year, 14 distressed homes were on the market, similar to today.
- There were 1,968 closed residential resales in April, up 16% compared to April 2023’s 1,696, and up 10% from March 2024. The sales-to-list price ratio was 100.4% for Orange County. Foreclosures accounted for 0.05% of all closed sales, and short sales accounted for 0.15%. That means that 99.8% of all sales were good ol’ fashioned sellers with equity.
- Don't let housing myths and misinformation derail your goals. Contact me for the latest facts and data.
