OC Housing Report

Challenges of Supply Situation

The inventory was falling from year to year before the pandemic, but levels have grown more acute post-COVID with a lack of forced selling and far fewer homeowners placing their homes on the market.

Before the pandemic, there were nearly three times as many homes on the market as today, and that will not change anytime soon, according to current trends.

It is getting harder and harder to find toy stores, bicycle shops, and sporting goods stores as more consumers turn to online shopping. Toys R Us closed its doors in 2017, Performance Bicycles sold its last bike in 2019, and Sports Authority filed for bankruptcy in 2016. These were all major national chains. Their closings, along with many small mom-and-pop shops, have made holiday shopping a lot more challenging. For many goods, what used to be a short drive down the street has turned into an internet search for a retailer that has what you are looking for “in stock,” and often a long drive. As a result, many have turned to internet shopping to avoid the hassle.   

Similarly, finding homes available for sale has been getting harder and harder. While there used to be an abundant supply of homes to purchase, slowly but surely, the inventory has diminished substantially. There is no longer a plethora of homes to choose from. In many price ranges and neighborhoods, the shelves are bare, and the stock is limited. Buyers cannot turn to the Internet for an increased supply of houses. Instead, it has become a significant waiting game. 

Today’s supply dilemma can be traced back to the Dodd-Frank Act, a 2010 law in response to the Great Financial Crisis. It prevented excessive risk-taking on Wall Street and provided common-sense protections for consumers in obtaining a loan. Predatory lending vanished. Nearly 35% of all mortgages were adjustable loans before the Great Recession. Today, it is less than 5%. Subprime lending, pick-a-payment plans, teaser adjustable-rate mortgages, and many other predatory lending products no longer exist. They have been replaced with fixed-rate mortgages and tight lending standards where borrowers must prove they can make their monthly mortgage payments.

Tight lending standards and fixed rates have resulted in a very healthy homeowner stock where fewer homeowners get in a pickle that forces them to sell. The total U.S. housing inventory peaked at just over 4 million homes during the Great Recession. There was a glut of homes available. From 2012 through 2019, inventory levels shrunk from year to year. 

 

 

 

 

 

 

 

 

 

 

 

Excerpt taken from an article by Steven Thomas.

About the Author

Tim Morissette, also known in the community as Mr. Foothill Ranch, offers over 46 years of real estate experience which has given him an established reputation and unmatched market knowledge. He is joined by his wife, Michele and sons Matt and Jeff, as they continue to offer personal service with an emphasis on achieving his clients’ real estate goals.  This unique combination of traits has led to his proven track record of referral and repeat business. This can be witnessed by the trust of homeowners in Foothill Ranch where he has sold twice as many homes and represented three times more buyers than the next-leading real estate agent for the last 26 years.

As residents of Foothill Ranch since 1994, Tim and Michele are actively involved in the community by fundraising for Foothill Ranch Library, Make-a-Wish Foundation, Cancer Society, Homes for Habitat, Relay for Life, South County Outreach, and the local church and schools. Tim enjoys sponsoring community-wide garage sales, paper shredding and e-waste recycling event, an Easter egg hunt, & a Meet Santa Event.

Tim and Michele are dedicated to their family of four sons, daughter-in-laws, and grandchildren. As a family, they enjoy many outdoor activities which include camping, spearfishing, mountain climbing and exploring the miles of hiking and equestrian trails in Foothill Ranch and the Whiting Ranch Wilderness Park. Tim and his sons are also avid snowboarders and enjoy mountain biking and lobster diving. Family is a top priority in the Morissette household. They look forward to helping more families achieve their dreams of homeownership.