Orange County Housing Report: The Inventory Drops Below 8,000

Great article.
This is what many of us are going through right now.




Incredibly, the continuous drop in the Orange County inventory has left many buyers scratching their collective heads, "Why aren't there more homes and why is there so much competition to buy?" Orange County housing is off to a normal, cyclical Autumn market start with drops in the inventory and demand. Yet, the active listing inventory has dropped, unabated since March of this year, an uncharacteristic trend that has everybody questioning what exactly is going on. First, homeowners are steering away from placing theirhomes on the market unless they absolutely have to. They understand now more than ever that they are competing with distressed sellers and that prices have come down off of their over inflated highs. Second, there is definite truth to the fact that there is a shadow inventory of homes that have not been foreclosed upon and if allowed to work their way through thenormal foreclosure process, more homes would be placed on the market. Yet, any increase would be rapidly sopped up by the current pent up demand from buyers who have been unsuccessful in purchasing after writing several offers. Third, with values coming down 35% or more from their peak, buyers, investors, speculators and first time homeowners are jumping into the market to purchase homes priced below $750,000. And, finally, with the help of the Federal Reserve, interest rates have reached historical lows that we may not see again in our lifetime. Put all of this together and we have experienced a gigantic drop in the active inventory.
So,where is demand going from here? Based upon prior years, we can expect a slow erosion in demand as the Autumn market eventually is followed by the many distractions of the Holiday market, from Halloween to the first couple of weeks of the New Year. The number of distress properties on the market dropped by 65 homes in the past two weeks, now totaling 2,319. 29.6% of the active inventory isdistressed compared to 43.3% last year. The distressed inventory has dropped 44% from its peak, reached in August of 2008. There are currently 320 foreclosures in all of Orange County, a drop of 14 in the past two weeks. Foreclosures only represent 4% of the active listing market and have an expected market time of 0.66 months. Foreclosures are the hottest segment of the current marketplace and are, on average, selling for 3% above their asking prices. There are currently 1,999 short sales on the active market, a drop of 51 over the past two weeks. The expected market time for short sales is currently at 1.61 months. Short sales are also a hot segmentwithin the marketplace; however, buyers should not expect instantaneous results and quick closings. The short sale process includes obtaining lender approval after the buyer and seller agrees upon a price. This is anecessary step because the seller owes more than the home is worth and must request that the lender take less than the full loan amount as repayment. The process is improving, but can still take months to obtain formal lender approval.