Fewer homeowners have opted to sell for years now in spite of massive appreciation and excellent conditions to sell. 

SO, what gives? Why aren’t homeowners moving like they did before? 

Some think it is because too many millennials are delaying the purchase of their first home and are shacking up with their parents. Others think it is because financing is too tight and that Dodd-Frank regulations are hurting housing. Both issues would have a negative effect on demand; however, housing does not have a problem with demand.

One of the key issues that has impacted the Orange County housing market has been the lack of affordable new housing. Today’s builders have been focusing on catering towards the higher end. The Orange County new home market used to create a lot more local real estate activity as many local homeowners bought new and had to sell their existing homes first. With the county running out of vacant land, this will be an ongoing issue.

Many homeowners are not moving because owning a home long term is now in vogue. The Great Recession rattled our collective psyche and people came out of it changed, looking at homeownership differently. Many are looking to hang onto their homes and dig in their roots, similar to the Midwest philosophy.

Still, the biggest factor preventing many would be sellers from placing their homes on the market is the fear that there will be nothing to buy after successfully selling their homes. This is one of the most prevalent, undermining market forces. Essentially, the low inventory is preventing homeowners from entering the fray. Collectively, they would significantly increase the inventory if they all gave it a shot and marketed their homes subject to finding a replacement property. A seller can accept an offer to purchase their home with the condition that they would be able to find a replacement property within a specific time period, 30-days being most common. If they are unable to find a replacement home within the given time period, then the contract is canceled or additional time may be negotiated.

Another way around this dilemma is the dreaded “double move” where a homeowner sells their home, moves into a monthly rental, and then takes their time to isolate the most ideal home for their family. There are plenty of moving companies that actually cater to this scenario and can crate and store whatever will not be used at the short term rental.

A lack of inventory coupled with a low housing turnover is a persistent trend that is not going to change in the near future. If you're a buyer, seller, or homeowner with any desire to make a move this year, call me to help you realistically approach the market and plan accordingly.