Orange County Housing Market Update (September 2023): Rising Home Prices & High Interest Rates
September 2023 Orange County Housing Market Update
The seasonal slowdown in the housing market has begun, with a noticeable decrease in both supply and demand. However don’t expect prices to fall in most markets in the months ahead.
Supply Side: The market has witnessed a significant drop in supply, with almost 40% fewer homes in Orange County coming on the market in August compared to a typical year before COVID. The homes that are available are being bought quickly, resulting in a low inventory environment.
Demand Side: Demand has been decreasing faster than supply, mainly due to a rise in interest rates, which recently peaked at nearly 7.5%. This trend is expected to continue throughout the fall.
Interest Rates: The high interest rates, the highest since the year 2000, have slowed down the market considerably. Many potential sellers are hesitant to sell their homes as they don't want to give up their low-interest rates, which would potentially double their payments if they moved.
Market Dynamics: With low supply being met with low demand, the market hasn't seen a significant shift yet, except that less homes are selling, and those homes that are selling are taking slightly longer to sell. The higher-end market (homes priced over $2 million) is experiencing a faster deceleration.
Future Trends: Interest rates might start decreasing by the first or second quarter of the next year, depending on various economic factors including the performance of the US economy and actions by the Federal Reserve. Expect rates to probably stay in the high 6’s to low 7’s for the remainder of 2023.
Affordability: With a recent study by the California Association of Realtors indicating that only 16% of Californians can afford to buy a home at the current prices, many would be home buyers have been priced out of the market.
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