The Story of the Orange County Housing Market in 2025
If Los Angeles moved toward balance in 2025, Orange County remained defined by scarcity—even as inventory finally began to loosen.
The year started with one of the lowest inventory levels ever recorded. While listings increased meaningfully as the year progressed, Orange County never reached anything close to pre-pandemic supply. By late summer, inventory peaked at just over 5,000 homes—the highest since 2019—but still far below historical norms. Even after this increase, Orange County ended the year nearly 30% below its typical pre-COVID December inventory levels.
This undersupply continues to be the backbone of the Orange County market.
2026 Orange County Housing Forecast: Three Scenarios
As with Los Angeles, mortgage rates will determine everything in 2026—particularly during the winter and spring markets.
1. Base Case: Gradual Cooling (Most Likely)
Mortgage rates stabilize between 6.0%–6.5%. Inventory grows modestly but remains well below pre-COVID levels. Buyer demand improves in spring, sales rise 4–7%, and home values increase 2–5%, supported by ongoing supply constraints.
2. Rate Relief Case: Mortgage Rates Drop into the 5s
If rates fall into the 5.75%–5.9% range, buyer demand accelerates sharply. Many sidelined buyers re-enter the market, competition increases—especially at entry and mid-price points—and home values rise 6–8%, with sales up 8–10%.
3. Higher-Rate Case: Rates Stay Above 6.5% (Least Likely)
If rates remain elevated, inventory builds faster, buyer urgency fades, and pricing pressure increases. Sales remain flat to slightly down, and home values soften 1–3%, though Orange County’s limited supply helps prevent deeper declines.
Across all scenarios, a foreclosure wave is not expected. Equity levels remain strong, lending standards are sound, and the housing stock is among the healthiest on record
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Bottom Line
Orange County remains a supply-constrained market, even in slower conditions. While buyers gained some leverage in 2025, long-term fundamentals—location, scarcity, and desirability continue to support values.
In 2026, success will depend on understanding rate cycles, seasonal timing, and precise pricing, not chasing yesterday’s market.
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