Ever since the Great Recession, far fewer homeowners have been selling their homes annually, a trend that is not going away.
Homeowners across the nation watched the housing market take a pounding during the Great Recession as their equity vanished in a blink. Many lost their homes to short sales or foreclosures. Everybody either personally got stung by the correction or knew of somebody who did. As a result, a new trend emerged to avoid a lobster red burn in the future: homeowners stay in their homes a lot longer. There are far fewer homeowners who opt to sell every year. Even with record home values, the trend continues.
The lack of supply and years of red-hot demand, juiced by historically low interest rates, has resulted in homes appreciating to record levels in Orange County, erasing the losses and sting of the Great Recession. This 10-year old trend is now the norm. Homeowners are simply not moving as often as they used to.
Based upon 2018 closed sales, the turnover rate for the Orange County housing stock is once every 21 years..
In 2018, the markets with the best turnover rates were in South Orange County and along the coast. From the south, Ladera Ranch and Rancho Mission Viejo top the list once again with a turnover rate of once every 11 years. Talega, Laguna Woods, Coto de Caza, San Juan Capistrano and Dove Canyon, all from the south, are all turning over faster than the rest of the county. Newport Coast and Corona del Mar, two of the most expensive zip codes in the county, also made the top eight list. Many of the top eight are newer areas, which tend to turn over more rapidly.
There are numerous reasons that homeowners in Orange County and across the nation are opting to stay put. After feeling the burn from the Great Recession, many are turning their homes into “Forever Homes.” A majority of homeowners have refinanced to historically low interest rates, some as low as the mid-threes, making moving a lot more challenging as rates rise. Most baby boomers plan on staying put instead of downsizing after retirement. They are not moving like many had originally forecasted. They have been selling at a much slower pace than prior generations. This could be due to a longer life expectancy and a healthier lifestyle. They are happy just aging in place. And, builders have not been building homes, especially in the lower ranges, like they did in prior decades. All of these factors combined have contributed to the low turnover rate in the housing stock.
Currently, the active inventory is at its highest level since 2012. That is not because suddenly homeowners are finally deciding to sell at a faster pace. In fact, the number of homeowners coming on the market is slightly less so far this year. Instead, the higher inventory is due to muted demand, a result of interest rates in the mid-4’s. Buyers must understand that the low turnover rate in the housing stock is here to stay. In some area, homes are coming on the market at a snail’s pace. Here is a great tip for buyers: realistically approach the market with market data, patience, persistence, and a solid game plan, utilizing the expertise of a professional REALTOR®.