Find out the latest Orange County home sales data, as well as the outlook of the real estate market.
How is the housing market in Orange County?
According to the Orange County Real Estate Market Report for August 2021, the median sale price of single-family homes in OC remains over $1 million, with average days on market down to just 19 days. With prices continuing to rise due to lack of inventory, this is a great time for homeowners to take advantage and sell. It’s going to be a HOT summer real estate market so get ready!
If you are considering a home sale, now’s the smartest time to do it so with rising home prices so you can sell for top dollar and secure a record-low mortgage rate on your next dream home.
Step 1: Find out how COVID has changed your home’s value.
Step 2: Review the full report on homes for sale in Orange County to find out how your city specifically is rebounding from coronavirus.
Step 3: Chat with a knowledgeable First Team agent to create your personal plan.
California Housing Market Trends For August
- Inventory: With only 2,534 single-family homes for sale on the market in August, inventory has dropped 18.73% year over year. Low inventory across Orange County and the entire state has created more bidding wars with multiple offers becoming common. The low active listings are a sign of a seller’s market.
- Buyer Demand: Buyer demand is still outpacing supply which is why homes are flying off the market quickly with an average of only 19 days on market. A common way to measure demand on the real estate market specifically is by calculating the absorption rate, which compares the number of homes sold in a month to the total number of homes for sale on the market. In August, the absorption rate was 71%. To put that in context, an absorption rate of over 20% is considered a seller’s market, and anything less than 15% is a buyer’s market.
- Median Housing Prices: Considering housing inventory hit record lows and demand is so high, the price increase is inevitable across Orange County. The median housing price of existing single-family homes is up to $1,090,000, an increase of 19.7% year over year. All across Southern California, home prices have hit record highs this year.
- Luxury Highlight: The average sale price in Newport Beach is up to $3,794,202. Even though inventory is only half of what it was this time last year, there are significantly more sold transactions. Typically, luxury homes sit on the market for several months longer than lower-priced homes but in Newport Beach, the average days on market is only 30 days! The summer market has been hot across all price ranges in Southern California, and is likely to continue through fall.
Inventory is low, prices are rising, and high buyer demand helped along by low interest rates has the market flooded with house hunters. There’s no question that we’re in the midst of an extremely hot seller’s market. Homeowners are selling in days, capturing top dollar for their properties because they are in such high demand.
In previous years we have experienced seller’s markets, but this one is being described as one of the hottest markets in U.S. history. Move-up buyers and those looking to downsize are in a particularly advantageous position in today’s market because low mortgage rates ensure you can sell your home and secure an amazingly low rate on your dream home, making it more affordable now than ever.
Is it better to rent or buy in Orange County?
Mortgage rates are a good determination of whether or not it’s a good time to buy a house in Orange County. According to the recent Mortgage Watch, rates are still low despite positive economic data. While we know that the Fed could be implementing rate increases, there’s no indication that that will be any time soon.
So while deciding whether it’s best to buy or rent is a very personal decision based on your unique situation, low mortgage rates tell us it’s a financially beneficial time to stop renting and purchase a home.
To help you decide whether or not it’s better to rent or buy in Orange County, renters consider these 4 questions:
- How long do you want to live here? We won’t be offended if your time in Orange County is limited. And if you prefer the flexibility to pick and move any time you’d like, it’s probably financially smarter to continue renting. But if you’ve fallen in love with the perfect weather nearly 24/7 and the great mix of entertainment and relaxation, then you’re here to stay. If you’re planning on putting down roots then it’s best to buy. As the saying goes, “Don’t wait to buy real estate. Buy real estate, and wait.” The general rule of thumb is 5 years. If you know you’ll be staying put for at least 5 years, then that allows you enough time to enjoy your home, make it your own, and build up a good amount of equity so that you can sell and have enough profit to comfortably buy your next home to fit your growing needs.
- What are your current monthly costs? Just because you can afford the monthly mortgage payment doesn’t mean you can afford a home including all of the maintenance costs. Each month you will be paying principal and interest on your mortgage, as well as property taxes, homeowners insurance, possibly mortgage insurance, and maybe even HOA fees. Plus, once you’re a homeowner you are responsible for replacing your water heater, fixing toilets, calling an electrician when a fuse blows, and more. When comparing the costs, buying a home can be cheaper in the long run because it allows you to build equity. According to a National Association of REALTORS® report, after roughly 6 years a homeowner’s mortgage payment is lower than that of a renter.
- Can you afford a downpayment? The biggest upfront cost and hurdle to homeownership is the downpayment you need for a home. However, you may be surprised at the assistance available once you review all of the options. California offers downpayment assistance programs including GSFA which will gift buyers up to 5% in downpayment costs. And active and retired veterans always qualify for 0% with a VA loan. It’s important however to consider the other additional upfront costs of buying a home which includes closing costs, moving costs, and any repairs that may be needed ASAP.
- What kind of lifestyle do you want? No one wants to be house poor, spending all of your money on a mortgage payment with no room to enjoy your life. So when calculating whether or not you can afford to buy vs. rent, make sure you take discretionary spending into account. However, if you enjoy hosting friends for movie nights, board games, and dinner parties, spending on a home where you can entertain only makes sense. How you spend your time and money is a big decision, and should match your decision to buy or rent.
Will the housing market crash in 2022?
No, there is no market crash expected for this year or next. The last real estate market crash happened in 2008 when the bubble burst and home prices came crashing down with a wave of foreclosures. Although the real estate market today has the same high prices that we saw in 2008, there’s one big difference – supply and demand. In 2008 prices were overinflated based on a false sense of demand. Today’s prices are being driven up naturally based on low supply and very real demand bolstered by historically low rates.
There has been a moratorium on foreclosures since the CARES (Coronavirus Relief and Economic Security) Act was put in place last year. However, even once foreclosures begin to hit the market again, they will be absorbed quickly considering the current housing shortage.
The housing market is currently booming and could be for the next few years. In 2022, we expect more inventory to come onto the market once foreclosures return and home builders pick up the pace. However, the housing crisis likely won’t be over for at least another 6 years because inventory has dipped so low. It’s going to take quite some time, and perhaps even policy change, to change the tide and bring the market back up to neutral.
How Coronavirus has affected the real estate market
Surprisingly, the pandemic didn’t slow down the housing market — it helped kick it into high gear. When COVID hit in early March 2020, the market saw an immediate halt as homeowners and buyers sheltered in place. However, real estate was established as an essential business so transactions were still possible and shifted with a focus on virtual tours, online DocuSign, and more safety precautions.
With the ability to buy and sell 100% virtually, the real estate market revealed itself to be not only healthy but thrive during the global pandemic.
Median home prices in Southern California have skyrocketed as people are placing more importance on the value of a home. Coronavirus changed the needs and wants of homeowners, and pushed people to search for a home that fit their new lifestyle whether that meant a home office to work remotely, a home learning space for children, an in-law suite for aging parents, or simply more square footage.
During COVID, spending on home improvement projects increased significantly as we all remained at home, and design trends shifted. Open floor plans are less popular now, and dedicated functional spaces for working and learning are in. Outdoor spaces are more valuable than ever, being transformed into entertainment spaces.
Low Interest Rates
Interest rates also took a sharp downward turn during COVID which helped encourage home buyers to find a new home with a more affordable mortgage payment. Although the home prices have increased, the actual cost of a home has been brought down thanks to historically low interest rates. The rate you secure on your mortgage has a HUGE impact on your monthly cost. So even though prices have gone up, the monthly cost of a mortgage has decreased thanks to the Fed keeping interest rates low.
Homes For Sale in Orange County, CA
The Orange County real estate market is always changing and evolving, especially amid the ongoing pandemic. Stay on top of real estate market changes and updates by working with a First Team agent in your area. If you’re ready to find your next home in Orange County, start searching now to find a home you love.