For the second biweekly report in a row, there are very modest signs that the Orange County residential real estate market might be stabilizing. Or, at least, it might not be moving as relentlessly toward a buyers market as it was four weeks ago. We run the supply and demand numbers for the two weeks ending August 5, 2010.

On the supply side – aka the inventory of active listings - The number of homes on the market has increased without let up since the beginning of this year. This is in contrast to last year, when inventory began decreasing in mid-March. The trend toward fewer and fewer homes on the market continued until the beginning of this year. At that point, it began increasing again.

As of August 5, 2010, inventory totaled 11,414 homes, up 179 units, or 1.6% from two weeks ago. Last year at this time, the inventory was only 8,681, and more buyers were chasing that smaller inventory.

So where are the signs of stabilization? This inventory increase was the smallest since the second half of April, and demand actually managed a small increase.

“With the end of summer upon us, cyclically fewer homeowners place their homes on the market as the kids go back to school,” reports Steven Thomas of Altera Real Estate. “Look for this year to be no different. As more and more media reports of a cooling housing market since the end of the Federal Buyer Tax Credit in April, homeowners are once again facing the reality that the challenges of the housing market are not behind us.”

Nevertheless, demand, which had been falling since the end of April, held steady for the two weeks ending July 22, and actually managed to increase during the most recent two weeks. Demand (measured by the number of new pending sales during the last 30 days) for the two weeks ending August 5, 2010 was 2,972, up by 102 units, or 3.6% from two weeks ago. Last year – with many fewer homes on the market – demand was 3,471 homes.

Thomas called the most recent numbers “the first significant increase in demand since the end of the tax credit back in April. From here, we can expect demand to peak at the end of this month before slowly dropping with the beginning of the autumn market.”

While supply and demand both showed modest signs of stabilization, the third measure we watch at OC180NEWS - the number of distress homes in the active inventory – continued its steady growth. “The active distressed inventory grew by another 118 homes over the past two weeks and now totals 3,575 total foreclosures and short sales, levels not seen since April of 2009,” said Thomas. “The active distressed inventory started the year with 2,555 homes and has since grown by 40%. The distressed inventory now represents 31.3% of the current active inventory. Last year at this time, there were 2,559 distressed homes on the market, 1,016 fewer than today.”

In this article series we report on the numbers for Orange County in total. Real estate is very local and any buying or selling decisions should be based on circumstances of specific neighborhoods. This series is intended to provide information about general countywide trends in supply and demand.

All real estate data in this article is from a report published by Steven Thomas of Altera Real Estate.

This report appears on OC180NEWS every other Monday.