A 2022 Forecast
HAPPY NEW YEAR!!! Now, what does that mean for Orange County real estate? First, let us look back at what happened in 2020 in terms of the inventory, demand, luxury properties, and the Expected Market Time.
After starting the year with a record low number of available homes to purchase, the inventory did not increase like it typically does, and ultimately plunged to new record lows.
The year started off with an active inventory of 2,522 homes, the lowest level to start a year since tracking began in 2004. Typically, the inventory continuously climbs until peaking between July and August, but not this year. The inventory peaked on January 8th at 2,633 homes, dropped to 2,214 at the start of June, and then climbed slightly to 2,537 at the end of July, not much of a change for the first 7-months of the year. The 5-year average peak prior to COVID was 7,077, an astonishing 179% higher than this year. From August through year’s end, the number of available homes continuously dwindled down to unprecedented levels. The year finished with 1,072 homes, 60% lower than last year’s 2,675 record low level. The 5-year average end of December reading prior to COVID was 4,414, a mind-blowing 312% higher than 2021, quadruple today’s level.
With fewer homes coming on the market and soaring demand, the active listing inventory reached record low levels. It dipped below 3,000 homes for the first time ever at the end of 2020. It then dropped below 2,000 homes at the end of October. The inventory is poised to drop below 1,000 upon ringing in the New Year.
COVID-19 suppressed the inventory in Orange County in 2020, but this year the lack of homes available to purchase sidelined many homeowners contemplating making a move. They did not want to participate in a market fraught with tremendous competition, multiple offers, and purchase prices way above their asking prices. From January through November, there were 7% fewer homes placed on the market compared to the 3-year average prior to COVID (2017 to 2019), 2,517 fewer. Including 2020, there were 5,129 missing FOR-SALE signs. That may not seem like a lot, but every single missing sign just magnifies the inventory crisis.
Excerpt taken from an article by Steven Thomas.