Orange County Housing Market Update: Rising Inventory and Falling Demand

Orange County Housing Market Update: Rising Inventory and Falling Demand

The Orange County housing market has recently witnessed notable shifts in inventory and demand, impacting the overall dynamics of the real estate landscape. In this housing market update, we will delve into the latest statistics and trends that define the current state of housing in Orange County.

1. Inventory:
Over the past couple of weeks, the active listing inventory in Orange County has experienced a 3% increase, with 63 additional homes being listed. This surge brings the total inventory to 2,139, marking the largest rise seen this year. However, it's important to note that despite this increase, the current inventory level is the lowest for mid-May since tracking began in 2004.

2. Demand:
In contrast to the rising inventory, demand in the Orange County housing market has shown a decline. The number of pending sales over the prior month has dropped by 46 pending sales in the past two weeks, indicating a 3% decrease. Currently, there are 1,660 pending sales, the lowest mid-May reading since the COVID lockdown in 2020. Compared to last year, there were 2,179 pending sales, which represents a 31% decrease. Furthermore, when compared to the three-year average before COVID (2017 to 2019), the current demand is 67% lower, with only 2,765 pending sales.

3. Expected Market Time:
The Expected Market Time, which measures the number of days required to sell all Orange County listings at the current buying pace, has increased from 37 to 39 days over the past couple of weeks. This rise in market time reflects the combination of increased inventory and reduced demand. It is worth noting that the Expected Market Time in the previous year was 34 days, similar to the present.

4. Price Range Analysis:
Analyzing the Expected Market Time across different price ranges provides further insights into the market dynamics. Here's a breakdown of the changes in the Expected Market Time for various price segments:

- Homes priced below $750,000: The Expected Market Time decreased from 27 to 26 days. This price range accounts for 19% of the active inventory and 28% of demand.

- Homes priced between $750,000 and $1 million: The Expected Market Time increased from 23 to 25 days. This segment represents 15% of the active inventory and 24% of demand.

- Homes priced between $1 million and $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.

- Homes priced between $1.25 million and $1.5 million: The Expected Market Time increased from 32 to 34 days. This segment accounts for 10% of the active inventory and 11% of demand.

- Homes priced between $1.5 million and $2 million: The Expected Market Time increased from 46 to 47 days. This range represents 13% of the active inventory and 11% of demand.

- Homes priced between $2 million and $4 million: The Expected Market Time increased from 72 to 81 days in the past two weeks. 

- Homes priced between $4 million and $6 million: The Expected Market Time decreased from 116 to 113 days.

- Homes priced above $6 million: The Expected Market Time increased from 353 to 368 days.

5. Luxury and Distressed Homes:
Luxury homes, defined as properties priced above $2 million, make up 33% of the inventory and account for 12% of the demand. On the other hand, distressed homes, including short sales and foreclosures, represent a minuscule portion of the market. Combined, they make up only 0.5% of all listings and 0.3% of demand. Presently, there are three foreclosures and seven short sales available in Orange County, totaling ten distressed homes on the active market, which is a decrease of two from two weeks ago. It's noteworthy that the number of distressed homes on the market remains consistent with last year's figures.

6. Closed Residential Resales:
In April, there were 1,696 closed residential resales in Orange County. This represents a 34% decrease compared to April 2022 when there were 2,565 closed sales. Additionally, April 2023 saw a 5% drop in closed sales compared to the previous month, March. The sales-to-list price ratio for all of Orange County was 100.2%, indicating that most sellers were able to achieve their desired listing price. Foreclosures accounted for a mere 0.1% of all closed sales, while there were no closed short sales. This implies that a vast majority, 99.9%, of all sales involved sellers with equity.

In conclusion, the Orange County housing market is experiencing a unique set of circumstances with rising inventory levels but diminishing demand. The increase in active listings coupled with a decrease in pending sales has led to a slight increase in the Expected Market Time. However, it's important to note that despite the rise in inventory, the current levels are still the lowest for mid-May since tracking began. The market also showcases variations in the Expected Market Time across different price ranges, with homes priced below $750,000 experiencing a slight decrease in market time.

Luxury homes, although accounting for a significant portion of the inventory, represent a smaller proportion of demand. Distressed homes, including short sales and foreclosures, make up a minuscule percentage of the market. Lastly, closed residential resales in April have seen a decline compared to previous months and the previous year.

As the Orange County housing market continues to evolve, these insights provide a glimpse into the current trends and dynamics. Buyers and sellers alike should stay informed about these market conditions and seek professional advice to make informed decisions in this evolving real estate landscape.