Orange County Housing Report:

Orange County Housing Report:

  • Hamid Koochak
  • 05/17/23

 Hype Versus Data

 

From YouTube to TikTok to the backyard barbecue, there are plenty of narratives regarding the pending doom for housing that the underlying data does not support.

 

Stick to the Facts

The best advice in hearing all the talk swirling around the belief that a real estate crash lurks around the corner is to ignore the noise and stick to the facts.

 

Many YouTube channels, TikTok, and Instagram accounts are devoted to the housing crash narrative. Either housing is crashing, or it is about to. They are convinced that the market will implode, and values will plunge similar to or worse than the Great Recession. The videos are persuasive in tone but lack the complete picture, ignoring the actual underlying facts. Many of these prognosticators lack the economic credentials and have been calling for a housing collapse for years, steering hundreds of thousands of unsuspecting viewers in the wrong direction, preying on everyone who has been unable to purchase over the years and has been rooting for housing’s demise so that they can finally capture a piece of the American Dream. 

 

Home values rocketed higher from May 2020, right after the initial COVID lockdown, through May 2022. Rates plunged, reaching 17 record lows from March 2020 through January 2021, and remained low through March of last year. As rates climbed, the housing market slowed. After starting 2022 at 3.25%, they eclipsed 5% in May, 6% in September, and 7% in October. In the second half of the year, the housing crash crowd grew louder and louder as affordability eroded and home values declined. Is a housing downturn around the corner? Will home values plunge? The answer is straightforward in looking at the facts, not anytime soon. Ignore all the hype and rely on data. 

Active Listings

The active listing inventory in the past couple of weeks increased by 63 homes, up 3%, and now sits at 2,139, the largest rise of the year. Nonetheless, it is the lowest level for mid-May since tracking began in 2004. In April, 49% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 1,983 less. Last year, there were 2,452 homes on the market, 313 more homes, or 15% higher. The 3-year average before COVID (2017 to 2019) was 6,255, or 192% more, nearly triple.

 

Demand

Demand, the number of pending sales over the prior month, decreased by 46 pending sales in the past two weeks, down 3%, and now totals 1,660, the lowest mid-May reading since 2020 during the COVID lockdown. Last year, there were 2,179 pending sales, 31% more than today. The 3-year average before COVID (2017 to 2019) was 2,765, or 67% more. 

 

Orange County Housing Summary

 

  • With the inventory rising and demand falling, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, increased from 37 to 39 days in the past couple of weeks. It was 34 days last year, similar to today.  
  • For homes priced below $750,000, the Expected Market Time decreased from 27 to 26 days. This range represents 19% of the active inventory and 28% of demand. 
  • For homes priced between $750,000 and $1 million, the Expected Market Time increased from 23 to 25 days. This range represents 15% of the active inventory and 24% of demand.
  • For homes priced between $1 million to $1.25 million, the Expected Market Time increased from 23 to 26 days. This range represents 10% of the active inventory and 14% of demand.
  • For homes priced between $1.25 million to $1.5 million, the Expected Market Time increased from 32 to 34 days. This range represents 10% of the active inventory and 11% of demand.
  • For homes priced between $1.5 million to $2 million, the Expected Market Time increased from 46 to 47 days. This range represents 13% of the active inventory and 11% of demand.
  • For homes priced between $2 million and $4 million, the Expected Market Time in the past two weeks increased from 72 to 81 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 116 to 113 days. For homes priced above $6 million, the Expected Market Time increased from 353 to 368 days.
  • The luxury end, all homes above $2 million, account for 33% of the inventory and 12% of demand.
  • Distressed homes, both short sales and foreclosures combined, comprised only 0.5% of all listings and 0.3% of demand. Only three foreclosures and seven short sales are available today in Orange County, with ten total distressed homes on the active market, down two from two weeks ago. Last year there were three distressed homes on the market, similar to today.
  • There were 1,696 closed residential resales in April, 34% less than April 2022’s 2,565 closed sales. April marked a 5% drop compared to March 2023. The sales-to-list price ratio was 100.2% for all of Orange County. Foreclosures accounted for 0.1% of all closed sales, and there were no closed short sales. That means that 99.9% of all sales were good ol’ fashioned sellers with equity.

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