To get the complete Report and Charts, join our free Housing Report email list here.
It is best to step back from all the narratives, opinions, and noise whirling around the housing market and focus on the trends.
Driving a car in the middle of the night on an unfamiliar road without headlights would be challenging. For buyers and sellers stepping into the real estate scene, the countless YouTube videos, headlines, and neighborhood chatter make it as daunting as driving that car in the dark with no lights. To properly shed light on the current state of the housing market, ignoring the noise and turning to the 2024 trends backed by statistics and data will allow buyers and sellers to navigate the real scene properly.
Here is a breakdown of the “Top 5” Orange County housing trends:
-
After bouncing along a record-low number of homeowners willing to sell in the high mortgage rate environment, there are finally more new sellers in 2024. Most homeowners are “hunkering down,” unwilling to move due to their current underlying, locked-in, low fixed-rate mortgage. Since 84% of California homeowners with a mortgage have a fixed rate of 5% or lower, today’s nearly 7.5% mortgage rate prevents many would-be sellers from placing their homes on the market.
-
With a rising inventory, more homes are on the market than last year. The growth in the inventory is a direct result of more homes coming on the market in the higher price ranges, which take a bit longer to sell compared to the lower ranges, starter homes. The higher the price range, the longer it takes to sell, which has allowed more homes to accumulate on the market and the inventory to rise.
-
Demand has been bouncing along a bottom like last year. The current demand trendline cannot get much lower than it currently stands. Demand will only break higher when rates drop substantially below the 7% threshold. Until then, demand will continue to bounce along a bottom.
-
The market speed is a bit slower than last year. Today's Expected Market time is 41 days compared to 37 days last year. As long as the inventory growth continues to outpace last year’s growth, the market will continue to slow faster than last year. In the trenches, the difference between 41 and 37 days is almost undetectable, yet if current trends continue, year-over-year comparisons will be much more noticeable.
-
Higher mortgage rates are muffling the true potential of the Orange County housing market. Today’s 7.43% rate is much higher than 2023’s 6.59% level. As long as rates remain above the 7% threshold, activity will slow and impact the number of closed sales.
The active listing inventory increased by 136 homes in the past two weeks, up 6%, and now sits at 2,320, its highest level since last year’s November peak. Demand increased from 1,648 to 1,707 in the past couple of weeks, up 59 pending sales, or 4%, its highest level since September 2022, surpassing last year’s peak in demand of 1,706 at the end of April, one fewer pending sale. In the past couple of weeks, the luxury inventory of homes priced above $2 million increased from 787 to 851 homes, up 64 or 8%, the highest level since November 2020.
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 136 homes, up 6%, and now sits at 2,320. In March, 42% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,623 less. 149 more sellers came on the market this March compared to 2023. Last year, there were 2,076 homes on the market, 244 fewer homes, or 11% less. The 3-year average before COVID (2017 to 2019) was 6,002, or 159% extra, more than double.
- Demand, the number of pending sales over the prior month, increased by 59 pending sales in the past two weeks, up 4%, and now totals 1,707. Last year, there were 1,706 pending sales, nearly identical to today. The 3-year average before COVID (2017 to 2019) was 2,780, or 63% more.
- With supply rising faster than demand, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 40 to 41 days in the past couple of weeks. It was 37 days last year, similar to today. The 3-year average before COVID (2017 to 2019) was 65 days, slower than today.
- The Expected Market Time for homes priced below $750,000 decreased from 33 to 32 days. This range represents 18% of the active inventory and 23% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million remained unchanged at 24 days. This range represents 13% of the active inventory and 22% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million remained unchanged at 26 days. This range represents 9% of the active inventory and 15% of demand.
- The Expected Market Time for homes priced between $1.25 million and $1.5 million decreased from 34 to 33 days. This range represents 11% of the active inventory and 13% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million increased from 36 to 40 days. This range represents 12% of the active inventory and 13% of demand.
- In the past two weeks, the expected market time for homes priced between $2 million and $4 million increased from 64 to 65 days. For homes priced between $4 million and $6 million, the Expected Market Time increased from 138 to 184 days. For homes priced above $6 million, the Expected Market Time increased from 247 to 439 days.
- The luxury end, all homes above $2 million, account for 37% of the inventory and 14% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.2% of all listings and 0.2% of demand. Only three foreclosures and one short sale are available today in Orange County, with four total distressed homes on the active market, down one from two weeks ago. Last year, 12 distressed homes were on the market, similar to today.