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THE REAL ESTATE MARKET IN ORANGE COUNTY: EVERYTHING YOU NEED TO KNOW

Thursday, January 18, 2024   /   by Bob Cowan

THE REAL ESTATE MARKET IN ORANGE COUNTY: EVERYTHING YOU NEED TO KNOW

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Trends in the Orange County Housing Market


Orange County's housing market exhibits both positive and negative trends. Due to the limited supply and rising demand, the median sales price of all existing single-family homes climbed overall by roughly 7.9 percent from a few months earlier. This is a notable rise.

Nonetheless, there was a change in the market as seen by the median sold price, which dropped by roughly 4.2% when compared to the same time last year. Higher mortgage rates may be to blame for this, which affects how affordable homes are.


Some buyers might not be able to afford the properties they want due to higher monthly payments caused by rising mortgage rates. As a result, there is less demand overall, which drives down the price of such homes. Borrowers' purchasing power is reduced and their ability to purchase a larger number of properties is diminished as mortgage rates rise.

However, limited demand and purchasing power mean less competition, which could mean lower prices. Similarly, some purchasers wait to make the purchase in order for mortgage rates to decrease.

The Orange County Housing Market's Significant Factors

The following variables could have an impact on the property market in Orange County

1. Median Sales Price

From January to July, the median home sale price dropped by around 3.2 percent to $799,000. The median home sold price has dropped 11.2 percent from its May peak, and early indications suggest that it will level down at roughly $795,000. This is despite the fact that it is still over 109 percent higher than the national median sold price.

 

The 30-year fixed loan has a 6.42 percent higher rate even though average mortgage rates have decreased. Orange County seems to be experiencing a seller's market.

2. Reduced Builder Confidence

Builder confidence is still greater than it was in January, but it has decreased by around 55 points to 36 in March. Local builders will undoubtedly have more difficulties in Orange County, though. What is meant by this? Buyer demand will decline as a result of the probable higher median listing price.

 

There isn't much inventory on hand right now, but bidding wars could break out and force the market closer to equilibrium.

3. Significantly High Economy

Orange County, which encompasses Long Beach, Los Angeles, and Anaheim, has a stronger economy than the national average. The number of non-farm jobs increased by almost 215,000, reaching 6.33 million by December 2022. It did, however, decline in February.

 

Generally speaking, the annual growth contributed roughly 4.8% of the national rise, despite Orange County's population making up 3.9 percent of the US overall. Even while local unemployment decreased in December, it was still greater than the national rate.

4. Foreclosure Trends

Because of 2021 and 2022, many homeowners have mortgages with low rates, and unemployment is low. Delinquencies and foreclosures, on the other hand, are essentially nonexistent in Orange County and all of California.

 

What does this entail for anyone looking to buy real estate in Orange County? The median listing price of a property is not changing since loan rates are beginning to stabilize. People aren't obtaining the asking price they want, and there aren't as many bidding wars.

Will Orange County's Housing Market Collapse?

Orange County's property market isn't about to collapse, but now is probably not the ideal time for investors. Whether you look at the median listing price or the sales price of a house, you can see that they are still quite expensive.

 

The majority of investors choose not to handle this. Additionally, it indicates that there is more supply and less demand in Orange County and Los Angeles County. Right present, the market is a seller's market since a balanced market needs four to six months' worth of inventory.

In general, Orange County's and Los Angeles' housing supply declined in March 2022 and has since gradually increased. Inventory varied from 3.01 to 3.81 months between November 2022 and January 2023, indicating that it will decline once more.

 

Since mortgage rates are rising due to inflation, sales activity in the upcoming months will probably be affected. For the Federal Reserve, annual inflation is noticeably high even though it is slowly declining. Actually, back in March, it raised the federal funds rate by a quarter percent.

Purchase applications are still down by an average of 35% year over year, even though they increased during the fourth week. In general, both buyers and sellers are waiting while remaining inactive. It's obvious that sellers desire a higher median listing price, yet they continue to maintain their homes at that higher price. Even yet, they don't receive many bids, and if they wish to sell, they could have to accept less than the median price.


There is a lot of negotiation room, especially when it comes to standing inventory, for buyers and investors. The spring market is fairly saturated since many sellers want to get out of their houses. They wait, nevertheless, in an attempt to come as close as feasible to the median listing home price. Investors need to be discerning and assertive in their travels.

Because Los Angeles is such a large city and offers higher rents, most investors concentrate their efforts there. But most of the time, they also have to cope with rent control. It would therefore be prudent for them to look to Seal Beach, a reasonably priced city for purchasing.

Statistics about the Orange County Housing Market

• The median listing home price is about $1.1 million.

• The median listing home price per square foot is $604.

• The median sold home price is about $965,000.

• The average median days on the market is 55.

Housing Market Forecasts

Home prices should continue to decline, according to analysts, but not dramatically, and they won't make up for the higher interest rates. Houses, meanwhile, may appear more expensive.

Reduced Cost of Homes

The majority of analysts believe that the restricted supply will not lead housing prices to decrease. Nonetheless, a lot of individuals think that all vendors will have to lower their pricing due to rising interest rates.

Forecasts for the Orange County Housing Market

The West's economic powerhouse continues to draw commuters and job seekers from other regions, even in the face of recent population losses brought on by exorbitant housing costs. As a result, rentals and house prices have a floor.


Numerous problems have been plaguing the two-county area, including a dearth of reasonably priced housing, inadequate utilization of public transportation, and traffic congestion. Nevertheless, its cures are creative. It will take time to see if they can preserve the same dynamic that has made it possible for millions of individuals to enjoy the California dream.

In general, the Orange County region is expected to receive 3,800 single-family permits and 6,968 multi-family permits, according to US News' Housing Market Index. Los Angeles County, Long Beach, and Anaheim are included in this. Over the course of the projection period, permits should continue to decline.

Final Verdict

The pandemic helped sales in the past, but they are currently falling. The national debt is the administration's main focus, inflation is rising, and the future of the nation is not promising. These specifics affect how each local housing market operates. However, Orange County seems to have been hit the hardest.

There aren't as many foreclosures as investors would want, mortgage rates are higher than ever, and contractors are reluctant to build new homes. They typically like foreclosed properties since they are more affordable and simpler to purchase. Investors still have choices, though, provided they're prepared to look hard and investigate.

FAQs

Are Orange County Home Prices Falling?

Orange County, which encompasses the cities of Anaheim, Long Beach, and Los Angeles, has a large supply of real estate available in 2022. As a result, buyers perceived lower median sales prices and moderate values, with a little decline in January.

Does Orange County Currently Favor Sellers?

Indeed. At the moment, Orange County's housing market is a seller's market. As a result, costs have increased and property may sell more quickly. There are still choices. You might want to consider investing in Seal Beach because of its more affordable prices.

 

When there are more buyers than sellers, a bidding war may easily break out. Mortgage rates in Southern California are no longer cheap.

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  bob cowan, platinum living realty, january 2024

Platinum Living Realty
Bob Cowan
120 Newport Center Drive
Newport Beach, CA 92661
949-441-9918
DRE# 01970237

Based on information from California Regional Multiple Listing Service, Inc. as of April 16, 2024. This information is for your personal, non-commercial use and may not be used for any purpose other than to identify prospective properties you may be interested in purchasing. Display of MLS data is usually deemed reliable but is NOT guaranteed accurate by the MLS. Buyers are responsible for verifying the accuracy of all information and should investigate the data themselves or retain appropriate professionals. Information from sources other than the Listing Agent may have been included in the MLS data. Unless otherwise specified in writing, Broker/Agent has not and will not verify any information obtained from other sources. The Broker/Agent providing the information contained herein may or may not have been the Listing and/or Selling Agent.
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