Orange County Housing Market Forecast: What to Expect in the Fall of 2023
August 2023 Orange County Housing Market Update
The Orange County housing market is continuing to heat up in the fall of 2023. Home prices are rising, inventory is still at historic lows, and the housing market has fully recovered from the pandemic. Prices are at the highest levels ever, making it a challenging time for first-time buyers.
In June 2023, according to Corelogic, the median home price in Orange County was $1.059 million, up 3% from a year ago, completely erasing the "bubble burst" that so many people thought was going to happen. Inventory is still very low, with just 1 months of supply on the market. This means that homes are selling quickly and buyers are often competing in bidding wars.
The housing market is expected to continue to rise in the fall of 2023. However, the pace of growth may slow as interest rates have gone up over the last month and the traditional slowing of the housing market starts as kids go back to school. This could give buyers some breathing room when placing offers but affordability is still going to be a struggle this fall for many.
If you are thinking about buying a home in Orange County, it is important to be prepared for the challenges of the current market. You should have a strong financial plan and be prepared to act quickly when you find a home that you love.
Here are some additional tips for buyers in the Orange County housing market:
-Get pre-approved for a mortgage before you start looking at homes. This will show sellers that you are serious about buying and will give you an idea of how much you can afford.
-Be prepared to act quickly. Homes in Orange County are selling quickly, so you need to be ready to put in an offer as soon as you find a home that you like.
-Be willing to compromise on your must-haves. The housing market in Orange County is very competitive, so you may need to be willing to compromise on some of your must-haves in order to find a home that you can afford.
-Work with a experienced real estate agent who can help you navigate the competitive market and find the right home for you.
Want to have a friendly no pressure conversation about your specific real estate related questions? Schedule a 30 minute discover call with me by clicking here:
Full transcript of the episode:
I don't know about you, but it seemed like summer just started. However, I'm already seeing a bunch of photos from my friends and their kids going back to school, which in real estate basically means the summer market is over. And we're now transitioning into the fall market. So if you're thinking about buying or selling a home, how does that impact you as we go over these next couple of months? That's exactly what we're going to be talking about on today's episode. If you're a returning subscriber, thank you so much for your continued support. I really do appreciate it. If this is your first time here. Hi, I'm Josh Alexander, you'll local Orange County real estate agent, as well as host of Orange County Housing market news, your one stop shop for all things Orange County real estate. So on today's episode, I'm going to be going over my monthly housing market update for Orange County for the month of August. And I'm going to be going over the five things that you need to know if you're thinking of buying or selling a house. So let's go ahead and get into
it real quick before we begin, if you've watched these monthly updates before, you know that I deep dive into the data, and these things can drag out for 1520 25 minutes. Sometimes, however, based on the feedback I got, I'm going to start shortening these episodes to just give you the summary form of what you need to know. So if you are watching this, and you've watched previous episodes, if you liked this new format, please let me know in the comments. And vice versa. If you'd rather see all of that data as well as a summary, let me know as well because I'm constantly tweaking these episodes to make sure I'm benefiting you as much as possible. So let's go ahead and get into the five things that you need to know about the Orange County Housing market as we head into August. Okay, so the first thing you need to know is what is the Orange County Housing market doing right now. And right now we are in a hot seller's market. And it's been that way since March. There's multiple offers on the majority of properties, especially under the $2 million dollar price point right now, homes are going up in value. And we're seeing that appreciation happen month after month for six months in a row. Now, the second thing you need to know is the reason we have such a hot seller's market right now has everything to do with supply supply is anemic in Orange County right now. We're just hovering around 2400 homes, we're typically around this time, we usually have over 6500 homes, so we just don't have enough homes to meet the amount of demand out there. And even though demand is extremely low right now supply is still lower. So why is it lower? One of the biggest reasons is that a large majority of Californians right now, about 87%, as of the last step I looked at have interest rates 5% or below. So when people are locked into these low interest rates, they don't want to move in those they absolutely have to. So homeowners are basically stuck in their house right now, they don't want to sell because they know if they move to a home, even if it's the same priced home, as they currently have right now their mortgage payments are going to go up significantly. So they're renovating, they're staying in place. And they just don't want to sell their home right now unless they have to because of some major life event or they're moving for a job family's expanding something like that. So right now, that's not going to solve itself anytime soon, until interest rates start going down, we're going to have a major problem with inventory in Orange County. So the third thing you need to know about is interest rates over the last couple of weeks, we've seen interest rates start to creep back up again, we're 7% is starting to be more of the average versus a couple months ago when we were looking at 6.75. Now these are not huge differences. So overall, the fluctuation in interest rates has really come down to about 6.75 to 7.2. And we've been hovering in that range over the last couple of weeks. So they are still relatively stable. However, they are still very high compared to what a lot of people are used to. And again, like I said before, with the supply side of things, unless we see interest rates start coming down, you're just not going to see supply hit the market. Now when will interest rates come down? It's extremely hard to predict right now when inflation goes down, interest rates tend to follow however inflation has been going down. And interest rates are just kind of stuck at the level they are right now. However, it's important to know that over the next 12 months, almost all of the major institutions are predicting that mortgage rates will start to go down. And there's a good chunk of experts predicting that as we head into 2024 and go through the year that we should start seeing interest rates hopefully back in the five handles again, instead of the seven and sixes. So interest rates over the long term look like they are going to continue going down. However, over the next couple of months, I don't really expect them to go much lower than maybe 6.5% Because there's just too much uncertainty in the market still, even with inflation falling because Job Creation is still happening. Unemployment is still low and the feds are just not convinced that the inflationary period is over. So they're still trying to do everything they can to contain inflation. And this is having a lagging effect on interest rates, making them stay high for a longer period of time. So the fourth thing that you should know about in Orange County if you're thinking of buying or selling a home is that what
Should you expect to happen with both supply and demand over the next couple of weeks and even months will typically this month we're going to see inventory peak. So as kids go back to school, people that have had their homes in the market that were unsuccessful in selling them, are usually going to start taking them off the market. And at the same time, you're going to start seeing less and less homes hit the market every single week, because again, a lot of families just don't want to try to move as the beginning of the school year starts. They either did it in the summer, or they're going to wait till winter break, or most likely next summer before they decide to place their home on the market again. So inventory from here on out over the next couple of weeks should peak and should start going down. And same thing with demand demand has been going up slightly over the last couple of weeks. However, again, because people don't want to look for homes when their kids go back to school, you should start seeing demand decline as well. So as supply and demand decline, it really just means that less transactions are going to be happening in the Orange County Housing market. But when it comes to prices, right now, I just don't see any way that supply is going to get higher than demand. So expect there to be competition in the marketplace. Expect that seller's market to continue over the next couple of months, because supply is still going to be lower than demand as we head into fall. So the fifth and final thing is what is my recommendation for both buyers and sellers. Okay, so let's go ahead and start with the buying side first. So buyers if you're thinking of purchasing a home, like I said before, inventory is about to peak, which means right now you have the most amount of homes to choose from. And over the next couple of months, those choices are going to start going down. So if you're thinking about getting into the market, and you want to have a lot of options, now is a good time to start looking before people pull their homes off the market. As more and more kids head back to school, the only way that's going to change significantly is if interest rates dropped by a percent or more. And then you'll start to see more and more homeowners put their house on the market even in an offseason, because they've just been waiting for rates to drop. So that way they can sell their home move into a new home and the payments aren't going to be as significantly different. But I don't see that happening this year. So most likely, what you're going to see is inventory peaking in the next couple of weeks and going down from here. So get that pre approval, get out in the marketplace, start looking for homes, if you can't find something, you're like, you're going to need to be patient, it could take you a month, two months, three months for that perfect home to pop up. But when it does, you need to be pre approved and ready to go because it's still competitive out there. And if you're just waiting for it to pop up before you go through all the other processes to get your ducks lined up, then when that home pops up by the time to get the pre approval. By the time you contact an agent, that home is most likely going to be in escrow and you're going to miss out on it. So if you're thinking of buying a home in the next couple of months start that process now, even if you can't find something you like so you are ready to go. And you can take advantage if that perfect home does pop up. So on the selling side of things sellers, the best time to sell your home is traditionally always going to be spring, followed by summer, followed by fall. And like I said right now we are in the middle of that transition between the summer and fall market. Kids are going back to school already. However, not all of them have gone back to school. So you really have about a two or three week window where those buyers that are looking to move into a home before school starts are still actively looking for homes once the end of this month, it's all of those families are going to be stuck and staying put and not looking for homes until next year, most likely. So if you're thinking of selling your home, get your house on the market as soon as you can to take advantage of those additional buyers. Now, like I also said the seller's market is not going away anytime soon. So even if you can't get your house on the market right now, as long as you get your house on the market in the next couple of months, you price it correctly, it's updated, it's moving ready. In a good neighborhood, you're going to have a lot of traffic and you're going to be able to sell your home for a great price. However, it's going to be harder and harder and take longer and longer to sell your house as we head through the fall market. So again, still, the sooner you can get it on the market, the more chance of success you're going to have as we head through the rest of the year. If you find this information useful and you have some additional questions about the housing market, I'd be happy to have a conversation with you. Depending on where you're watching this look in the notes below look in the link in my bio, and there's a link you could click in there to schedule a 30 minute call for a time that's convenient for you. And we can go over any questions that you might have about buying or selling a home and if you have any family or friends that also can find this useful, please consider sharing it as well I would really appreciate it and again if you have a second to let me know in the comments if you liked this quicker format, or if you'd prefer I get more detailed into the numbers with you. Please leave that comment below because I'm always looking to craft these episodes to make it as useful as possible for the audience. So again, let me know in the comment sections below and until next week, stay healthy, stay happy and also