Orange County Real Estate in the Next 2 Years: Up or Down?

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.

Orange County Home Prices mid-2017

As we passed through the halfway point of 2017, the housing market in Southern California maintained its red hot pace with home prices hitting all-time high, again, and sales just one notch below their record high since 2006.

According to reports by real estate research firm CoreLogic, the median price of an Orange County home is $695,000 in June 2017.  If we go back exactly one year ago in June, the current home price is 6.1 percent more.  That’s pretty good appreciation and well above the inflation rate of 1.73 perceorange county reportnt from July 2016 to present.

Additional data reports by CoreLogic reveal there were 3,803 closed transactions in June by home buyers and sellers, the second-highest monthly figure dating back to June 2006. The typical June average in Orange County is 4,100 transactions and it is well below the record number of sales which occurred in August 1988 at 6,488.

Another interesting statistic in June, was the $500,000 median price of all Southern California homes. This number has not been touched since August of 2007.  The record high for median home price for all Southern California homes was $505,000, attained on three instances and all in the year 2007.

In Orange County, new construction home transactions are responsible for 30-35% of the sales as of July 2017. Many buyers are choosing to purchase a new home rather than a re-sale home for several reasons. When buying a newly constructed home, the buyer has the option to choose the home design layout, upgrades and special options.