The housing markets of Los Angeles, Orange County, San Diego, San Jose, San Francisco and Sacramento are bursting at the seams with an overall price growth rate of 10% annually since 2012.
The most recent forecasts for the Orange County housing market indicates that home prices will continue to rise in 2018 & 2019, attributable to low inventory and strong demand in both North and South County.
Orange County Housing Market During The Last Two Years
In 2016, the median home price for a single family home in Orange County went up by four percent from 2015. The same four-percent increase happened in 2017 too. In mid-2018, the median home value in Orange County is $761,700, based on data from multiple sources. In comparison to June 2007, Orange County’s median home selling price touched $645,000 — in that crazy period of high-risk lending and home buying frenzy.
Avg. Home Price 3/2018 MtM Yoy
Orange County $824,000 2.4 8.5
*MtM – Month to month percentage change
YoY – Year over year percent change
California housing market to Modestly Rise in 2018
Inventory is partially responsible for the increase in home values. There’s more than enough demand from prospective buyers, but there’s a lack of homes for sale to satisfy that demand. Home buyers are fiercely competing for low inventory, especially for homes priced at the lower end where multiple offers thrive.
A Two-Month Supply of Homes for Sale
From a home inventory perspective, Orange County has 2-month supply of homes for sale as of May 2018. That’s far lower than the 5- to 6-month inventory level that real estate economists deem a “balanced” housing market. However, the two-month supply is a 10 percent increase from a year ago.
Perhaps the NIMBY’s (Not in my back yard) are correct in that there is enough inventory. There’s no need to build in or near ecologically sensitive areas.
Home Affordability
Yes, it can be challenging for the average household to afford an Orange County home. According to data from the Orange County Register, it was worse in 2007. A comparison shows 21 percent of Orange County household are able to comfortably purchase a home this spring vs. just 12 percent in 2007.
Another statistic shows that 14 percent of homes were considered “affordable” in 2017 vs. 4.4 percent a decade ago. Keep in mind, interest rates are 2.8 percentage points less than 2007 and Orange County median household incomes are 12 percent higher!
As a home buyer in a market with strong demand, you’ll need to put forth your best possible effort when bidding in this market. Start the process of getting pre-approved for a mortgage, researching the neighborhood where you want to live, and hire a real estate agent to help you successfully buy a home in this tight, highly competitive market.
