Housing supply remains tight in "OC"

August home sales wrapped up higher than I expected. We had so little supply and still so many unmotivated buyers I didn't think we'd sell more than 2,000 homes in Orange County. I was happy to be proven wrong when 2129 closed sales posted. (A few more may trickle in as sales are documented after the fact.)

Nevertheless, housing supply was down 2% from last August while sales were down a whopping 32%. However in greater context, when compared to pre-pandemic averages, August supply was down 45% yet sales were only down 27%.

What does this mean? It means things haven't returned to "normal" yet. But we're moving in the right direction.

However, future home sales will not match what's behind us. We'll have far fewer homes listed for sale while owners stay put a whole lot longer. My bet is local home tenure rate, which has lengthened from 5 years before the 2008 crash to more than 11 years pre-pandemic, will settle into something closer to 15 years overall with some neighborhoods inching closer to 18 years.

There are many contributing factors for these persistent "stay-puters", including highly appreciated property values with super low property tax rates, owners with ultra low mortgage rates and limits on federal income tax write offs, all of which make reselling in high cost areas pretty unappealing. Many, I'd even say most, homeowners won't sell until they literally must.

If I was a betting woman (and boy howdy am I) I'd guess that Orange County will settle into a future pattern of 3,500 - 5,500 homes for sale monthly and 1,700 - 2,600 selling, for annual sales around 24,000. That's roughly 22% fewer than historic norms.

Given my expectation of significantly fewer homes sold, I do not share NAR President Leslie Rouda Smith's exuberance about the number of Realtor licensees reaching 1.5 million in the US. Trading Economics forecasts 5M homes to sell nationally in 2023 and 4.7M in 2024. That's just over 3 homes sold per agent annually. In many areas, particularly where home values are lower, agents need to sell 1-2 homes monthly just to survive.

If you think the number of agents knocking on your door desperate to sell your home is annoying now. Just wait.

Anyone who wants to stay in this business needs to sharpen their skills, expand their knowledge of local markets, regulations, demographic trends and be ready to demonstrate true value to clients. This means going beyond mastering TikTok videos, or sharing canned data created by trade industry sources or, worse, resharing sensational media headlines. Real estate is highly nuanced and hyper local. We must raise the bar and all become the professional advisers consumers want and deserve.

I know I am.

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