Orange County Housing Market Update: May 2023
We're coming up on a year from the peak of the market. Which sounds crazy that it's already been a year since the market shifted from insanity to a big cool down.
A lot of the people we have been talking to have been speculating what was going to happen. Some felt that we would see a major market crash. Others thought we would see the market go back to normal. Some thought we'd see prices continue to rise.
This is going to be a quick overview of what has happened over the last year. Then I'll give a state of the market. I'll share exactly what is happening right now, and what we expect to see rolling into the Summer selling season.
Over the last year... (These are Orange County numbers, for the record. If you'd like an overview of the market you're curious about, I'd be happy to do so, reach out and ask.)
We saw prices hit a peak in April of 2022. We track the MEDIAN price point because that is the "middle" sale for the month, this way really expensive sales don't skew the numbers.
The median sale price in April 2022 was $1,065,000 which was the highest ever recorded. As you can see in this picture
Remember that closings are always ~30 days behind what is actually happening... Looking back to what mortgage rates did. In March 2022, interest rates were 3.76% which was up a full 1% from the bottom.
From March to April, rates increase increased from 3.76% to 5%. It's easy to see why home prices stopped going up.
A lot of buyers got out of the market in expectation for a major market crash. We were talking to buyers who were thinking that we would see prices drop by 30-40% (just like in 2008!).
This led to fewer sales, but there was one thing that very few people expected. There wasn't a floor of new inventory coming to the market. Actually, the opposite happened. Inventory dropped to the lowest level we've ever seen. For reference, we had 50% less homes for sale in December than any other low inventory years.
Now talking about supply and demand, with both very low, prices adjusted, just not as much as a lot of people expected.
From the peak prices in April 2022 ($1,065,000) to what was the bottom in December 2022 ($920,000) we saw a 14% drop in median pricing.
Let's talk about what's happening now.
Since the beginning of 2023, we've seen a stead increase in buyer demand. Buyers have gotten used to rates in the 6% range. When buyer demand increases and supply decreases, what happens next is easy.
More buyers and less sellers is a recipe for prices to raise. Which is exactly what has happened. Prices at the bottom in December 2022 were at ($920,000) and the numbers for March 2023 show prices have increased to ($975,000). That is a 6% gain in pricing in the first quarter of the year.
There weren't many people predicting that. But, when you look at what has happened with inventory, it is not surprising.
We've seen inventory back down at the lowest points we've seen, and there aren't a lot of signs of significantly more coming. As of writing this, we have 2,213 homes on the market. Remember, a healthy market has between 6,000 - 8,000 homes on the market at any time.
What is the outcome of this?
We're seeing multiple offer situations back on MOST listings. When I say most, I mean those that "Look good and are priced right."
Buyers are getting aggressive again with their terms, waiving terms, going above asking...
There is a window of opportunity for those that are willing to take advantage of the market right now.
If you're a home buyer right now, the good news for you is that we are quick to pivot.
We offer a FREE Strategy Session. We explain how we help our clients take advantage of the market and keep you protected while getting the best deal possible. Talk to one of our Local Experts, today - Click Here.