Monday, March 19, 2007

More on Orange County Housing Inventory Levels

In a prior post, I wrote about the surprising inventory data I found out on Today, I am going to continue looking at inventory, but I've also pulled some census data so we can not only look at the months of inventory on the market but also the total percentage of homes on the market.

We saw in my last post that there appears to be a lot more inventory on the market than has been reported. We also saw that within the county, the amount of inventory on the market varied very, very widely with some areas like Seal Beach with just a couple of months of inventory and others like San Clemente with over a couple of years of inventory. But months of inventory is only one measure, so maybe some areas aren't really getting a fair break.

With that in mind, I decided to pull some demographic data and have a look at the proportion of homes for sale, settling on Total Housing Units the most "fair" basis for comparison. Here are the results:

You will note many of the areas with the highest percentage of homes on sale are also areas that added a lot of housing units in the last several years. Given that the Housing Unit data is from the 2000 census, there is a reasonable argument that could be made that the percentage for high growth areas is likely overstated. I think it probably is, but with some cities having more than twice county average percentage of homes for sale, I think that argument only goes so far.

If you were do a comparison of both methods, you'd note that many of the cities listed here as having the highest percentage of homes for sale also had the great number of months of inventory as well. To save you the effort, the cities of Dana Point, Laguna Niguel, Yorba Linda, Lake Forest and San Clemente all fared very poorly in both methods of analysis. Other cities fared realtively well under both methods, including Fullerton, Seal Beach, Buena Park and Garden Grove. And, of course, there were many citites that showed strength in one measure in weakness in the other.

In a post later this week, we'll take even a closer look at these two inventory metrics and how they interplay in different Orange County cities. We will also discover that some of these cities have much more in common than just their inventory levels.


Markus Arelius said...

Thanks for taking the time to run this analysis and post your work. Tedious stuff. But very enlightening.

Unfortunately, there exists no single trusted source of information about real estate numbers anywhere, let alone Orange County, California. You just can't find it. Hence, the requirement for you to performa a manual tally.

I am not surprised about the Lake Forest figures. Single family homes here seem to have been up for sale for several months without turning. I'm convinced that many that were for sale by owners have been removed after months of no movement.

The problem currently is, and will continue to be, the sales price of single family homes.

It will become increasingly difficult for realtors in OC to find fast deciding buyers of $650 to $750K homes, let alone $450K condos, even if the potential buyer has a 6 figure income and lily white credit history. The idea that such an outlay is a "safe investment" is basically dead.

Anyone who does buy a home at current market prices in Lake Forest is, in my opinion, either filthy rich or a complete idiot, but probably both.

I'm sure realtors have begun leading with homesellers who expected an easy $100K profit on their homesale, to accept the new lay of the OC real estate market.
The pressure to just make the sales transaction might turn nutcrushing over time, especially for those realtors who have OC house payments over their own to make.

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