May 2023 Orange County Housing Market Update
May 2023 Orange County Housing Market Update
It MAY be hard to believe but the housing market in most price ranges is back to a seller’s market in Orange County as we head toward the summer. Open houses are packed and multiple offers are becoming more and more common as the weeks go on. How is this possible with home prices and interest rates so high? It all comes down to supply and demand, and right now we are dealing with the lowest supply of housing in Orange County for this time of year since at least 2004. We are almost 200% lower than where we should be right now. So even though demand is lower than normal as well, it’s nowhere near as low as supply and unless we see a spike in interest rates above 7%, which is becoming less likely by the day, this isn’t going to change anytime soon. Buyers, if you are thinking of buying a home this Summer the sooner you get into escrow the better it will be in terms of the price you pay. Sellers, get your home on the market NOW! There are so many buyers just waiting for the perfect home to hit the market and as long as you price and market your home correctly, you’ll be able to get into escrow in less than a month in most prices ranges again. This is an especially great timing for anyone looking to buy and sell a home after the school year is over because we are only a few weeks away from summer in most school districts around Orange County.
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Buyers grab a tissue box because you're probably going to need it after today's episode. So not only are interest rates still hovering in the mid 6% range, but home prices in Orange County are back on the rise again. So how much are they going up? And will this continue to happen? That's what we're going to talk about on today's episode. On today's episode, I'm going to be going over what you should expect to happen in the housing market in Orange County in the month of May. So let's go ahead get into it.
Back in last month's market update, I told you that open houses were being packed again, multiple offers becoming more commonplace, and there's a very good chance that we are about to hit the bottom or that we already hit the bottom and home value should start to go back up again. As long as nothing crazy happened with interest rates. And over the last couple of weeks open houses are becoming even more packed and multiple offers are coming on more and more properties. And now the data is also finally coming in showing Yes, that's exactly what happened.
Home values are back on the rise not only in Orange County, but throughout California. So a new report that was just released by the California Association of Realtors showed that between the months of February in March throughout California, the median home value went up by 7.6% and in Orange County, it went up by 7.9%. In Orange County, we had some significant growth compared to the rest of the counties. And if you look at all the counties pretty much everywhere, except for LA County saw positive growth between February and March. Now does this mean that all homes in Orange County just went up by 7.9% in one month? No. But it does mean that in general, we are starting to see prices increase throughout Orange County. And there's a couple of reasons for this.
So the reason we saw such a big jump, in my opinion from February to March is because if you remember in February, it was one of the only times that we've seen interest rates below 6%, at least for a few weeks, in months. So because interest rates were going down, we had a bunch of homebuyers into the market get into escrow and those homes closed in March. So that's why that March data is showing that we've had so much growth is because we had a giant explosion of homebuyers trying to take advantage of those lower interest rates. Now should we expect to see home prices continue to go up? Well, based on what I'm seeing every single weekend with packed open houses and multiple offers the last agent I just talked to yesterday had 18 offers on their property, you can expect to see home values in Orange County continue to rise. And it's going to be extremely competitive, especially in the price ranges at 1.5 million and below right now.
So why is this happening if interest rates are so high affordability is so low right now? How are we seeing home prices start to go up again? Well, if you go again, back to my April update, I expand on that in a little bit more detail. But basically all you need to know is that supply is way lower than demand right now. So right now in Orange County, we have around 2100 homes on the market, typically during this time of year. So the three years leading up to COVID. We are looking at an average of 6000 homes on the market. So almost 200% more homes on the market during this time of year. Now even though demand is also low. It's only about 60 63% lower than it normally is. And we're starting to see demand continue to grow. While supply is really just having a hard time getting above that hump and getting any larger over the last couple of weeks supply went up by about 1% or demand grew by about 3%. So demand is continuing to grow faster than supply. And even though both are low supply is way lower than demand right now. And that's causing these price increases, because there's just not enough homes out there for the buyers trying to purchase properties right now. Now, are we back to that crazy hot housing market we saw during COVID? No, but surprisingly, we're not that far off.
Right now the average days on market in Orange County. So the time a seller puts their house on the market to when it goes into escrow has been hovering right in the mid 30s. Now typically, a seller's market is anything under 90 days. So when you're in the mid 30s, we are definitely in a hot seller's market. And again, the majority of price ranges under 1.5 million in Orange County.
So if you're thinking of buying or selling a home in the month of May, what should you expect?
Well, on the buying side of things, you just need to expect a lot of competition. There are a lot of people looking for very few homes right now, which means that you need to have your pre approval ready if you don't already have that stop which You're doing talk to a lender, it's free, because you really can't place an offer without one right now have that pre approval ready, be able to have a game plan set up with your agent. So you can see the home as quick as possible. Because typically, once the house goes on the market, after that weekend, you're going to have multiple offers on those homes. So if you're not part of that process, you're going to miss out on that home. So make sure you have that ready to go. And then make sure before you start looking for homes, you have that list of must haves. So that way you can identify your home quickly and know that it's going to work for you. And that way you don't feel that buyer's remorse after you get into escrow and close on it, because it's going to meet that specific criteria that you have for your home. Now, if you're a buyer sitting on the sidelines, right now thinking to yourself, I don't want to deal with this, I want to wait for interest rates to go down, I want to wait for inventory to go up a little bit. So it's not so crazy, just know that there is no data showing right now that inventory is going to rise. And there are a lot of reasons for that. I've gone over that in the last couple of videos I did. So you can feel free to go back and check that out. But inventory is just not going to rise to a point where you're going to see home prices coming down anytime soon, they might flatten out for a little while. But going down at this point is going to be extremely difficult to do unless interest rates get above 7% sustainably. If you see interest rates above 7% For an entire month, then you might see the housing market slow down again. But right now, every single month that goes by, it's becoming more and more clear that we probably saw the highest interest rates that we're going to see last October, and they've been dropping ever since.
So what is my advice for buyers during this month? Well, it's pretty much always the same thing. And my advice is you're not a market speculator. You're not trying to flip a property. Most buyers are trying to buy a house for yourself, for your family to live in for the long term. So if you're thinking of buying a home, and you want to be there five plus years, you need to talk to a lender, they're going to tell you what you can afford right now. And if that payment gets you into the neighborhood with the amenities you want, then now is always a good time to buy a home. If interest rates drop, you can always refinance later and get a lower monthly payment. And if interest rates do go up in the future, you know that you got a great deal on that loan and you have that set monthly payment that you don't have to worry about. So if you can afford to get into the home in the area you want right now, it's always a good time to start looking. Now the one ray of hope that I will get for buyers is during the month of May typically, that is when we see the most amount of homes hit the market out of any other month during the year. So there is a good chance that hopefully inventory will go up at least a little bit, giving you some more options over the next couple of weeks. However, that's not a given if interest rates drop and demand goes up even higher than inventory is just not going to get up. However, this month, because school's almost out is the month that a lot of sellers placed their house on the market. So make sure you have that pre approval ready to go and you're able to pounce on any home, that's going to be ideal for you and your family.
So on the selling side of things, please just get your house on the market buyers are out there waiting for homes on the market, I'm working with six or seven buyers right now that are just sitting there waiting for the right house to pop up. So they can actually place an offer, there's just not enough inventory. So if you're thinking of selling your house, as long as you price it correctly and market it correctly, you're going to get a great price for your home. In fact, over the last 250 sales in Orange County, 60% of those were at or above asking price, which is the highest it's been in months. So as long as you price that home correctly, you're going to have a lot of activity, you're going to most likely get multiple offers, and be able to be a little bit more selective on which offer you choose. This is also an ideal month to get your house on the market if the kids are getting out of school in the next month or two because you can get your house on the market, get it sold, and then find a new place to call home as the summer hits. And you can move your kids where it's not during the middle of the school year, which is why again, most sellers tend to put their house on the market during the month of May to take advantage of that seasonality where their kids are getting out of school right as they're selling their house so they can move to the new house spend summer there and then start up the new school year in the fall.
Now if you're still debating Is this a good time to buy good time to sell and you want some actual personal advice to go over your situation specifically, feel free to get in contact with me and set up a discovery call takes about 30 minutes I can answer any questions about the housing market you have. Feel free to CLICK HERE to set up a time that works for you. I'd love to chat with you about the housing market to see if now would be a good time for you to buy or sell a home or if you should wait a little bit longer based on your specific circumstances.
And finally, as always, don't forget to subscribe to my social media channels because I put out new content like this at least once a week to give you updates on what's happening in the housing market. So if you're thinking of buying or selling home in the near future, this is a great place to start. You can follow me on your favorite social media platforms by CLICKING HERE