Orange County's Realtor

The Orange County Housing Market has frustrated buyers for over a year with incredible, relentless competition that makes it extremely difficult to secure a home.

"When it rains it pours."

There are times in life when it seems impossible to take a break. All the cards feel like they're stacked against you. So many buyers feel this way for over a year now. The housing market has been extremely hot since June last year and has not left since then. Buyers face a lot of interest in almost every home that it is brought on the market. Multiple offers are the rule. Homes that are being sold above their list prices are "the norm". 

It's hard to be a buyer looking to buy into today's housing market. It feels like they're constantly against the ropes in a 12 round Heavyweight fight. Simply put, securing a home is extraordinarily frustrating for buyers. Many kick themselves and I wish they could have bought a year ago knowing homes were valued at record values ​​since then. But this way of thinking is pointless. Home values ​​have risen for Decades. Instead of dwelling in the past, it is best to look at where living is today and where to go in the future.

The active population is of homes for sale is 2,289, the lowest level for this since the pre-Covid. The 3-year average from 2017 to 2019 (intentional omission of the last year due to to offset COVID) is 6,520 apartments, 185% more than today, another 4,231 FOR SALE signs. It didn't help that 1,720 fewer apartments were brought onto the market 6% less than the 3-year average. Even with less available apartments, the demand (the last 30 days of outstanding sales) runs continuously hot. The 3 year average from 2017 to 2019 is 2,363 pending sales, 10% less or 260 less than 2,682 today.

The high demand combined with a supply crisis has led to an expected market time (number of days between market entry and opening of the escrow account) at an extremely low, unprecedented level. It's at 26 days today and has been below the 40-day mark since January, which suggests an insane market with tons of demonstrations, multiple offers, sale prices above list prices, and a rapid appreciation.

Current market momentum suggests an ongoing supply crunch with fewer homes fighting, increased demand due to relentless historically low mortgage rates, and insane expected market time that stays consistently below 40 days. This is a recipe for persistent multiple offers, persistent buyers jumping on everything that is placed in the market, and lasting appreciation.

Knowing where the market is today and where it is going from here is very important. When buyers qualify to purchase and are satisfied with the monthly payment, they can be confident that they are benefiting from today's remarkable, historically low mortgage rate environment and that home appreciation will continue for the foreseeable future. If you compare a home bought today for $1 million to a 20% down payment, the monthly payment is $3,313 at 2.86%. Home appreciation will slow somewhat over the next year, from 20% today to around 10%. If prices stayed the same, the $1 million home would grow to $1.1 million in a year and the payment would be $ 3,644 per month. That's an extra $ 331 each month, or nearly $4,000 annually if a home purchase is withheld for a year.

Many financial institutions and economists are forecasting interest rates to rise to around 3.5% in a year. With a $1 million home upgraded to $1.1 million and the interest rates rising from 2.86% to 3.5%, the monthly mortgage payment rises to $3,952 per month. That's an additional $ 639 each month, or an increase of over $7,500 per year for the life of the loan.