Home prices and sales are moderating in Orange County. Following a two-year housing boom, the Orange County housing market is cooling off. Although more buyers are backing out, there is still demand in Orange County. Home prices continue to be historically high. This has occurred as homebuyers continue to compete for an exceedingly limited number of available homes for sale. The median house price in Orange County remained flat from August to September 2022. Still, the median price was 9.1 percent higher than a year ago.
The 30-year fixed mortgage rate continued its rapid ascent throughout the first few months of 2022, but it began to level off in June, coming close to reaching 6 percent before settling into the 5s. Then it surpassed 6% in September and now it has exceeded 7% for the first time in two decades. The rise has led to a drop in residential home sales. This has increased the monthly cost of a home and reduced the loan amounts available to borrowers.
Because fewer people are looking for a home, houses are staying on the market for longer, giving the remaining buyers more options. According to the most recent C.A.R. report, single-family home sales in the Orange County housing market fell by a whopping 30.9% from last year. There was also a drop of 5.8% from the previous month. The median sales price was $1,200,000 in Sept 2022. The median price in Orange County at this time last year was $1,100,000.
Are Orange County Home Prices Dropping?
The following housing market trends in Orange County are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only. Home prices are increasing in the Orange County housing market. In September 2022, the median listing home price in Orange County, CA was $1.1M, trending up 13.9% year-over-year. The median listing home price per square foot was $599. The median home sold price was $950K.
Orange County, CA was a seller's market in September 2022, which means that more people are looking to buy than there are homes available. Orange County had a total sales-to-total listings ratio above 0.2, which favors sellers. Orange County, CA homes typically sell after 55 days on the market. Newport Beach has a median listing home price of $3.7M, making it the most expensive city in Orange County. Laguna Woods is the most affordable city, with a median listing home price of $399K.
Orange County is the most expensive real estate market in Southern California with a median sales price of more than a million dollars. Data by Redfin shows that the average sale price of a home in Orange County was $945K last month, up 2.7% since last year. The average sale price per square foot in Orange County is $580, up 8.0% since last year.
- In September 2022, Orange County home prices were up 6.7% compared to last year, selling for a median price of $960K.
- On average, homes in Orange County sell after 42 days on the market compared to 32 days last year.
- There were 1,951 homes sold in September this year, down from 2,880 last year.
In the last year and a half, the coronavirus pandemic created a fierce real estate market. Buyers were outbidding each other due to historically low mortgage rates, inflating home prices, and depleting home inventory. However, with the Federal Reserve clamping down on inflation and raising interest rates, many buyers are holding back, fearing a recession. The Orange County housing market is also shifting from hot to more balanced conditions.
Is it a good time to buy a house in Orange County?
Mortgage rates are rising compared to last year. After rapidly rising in the first few months of 2022, the 30-year fixed mortgage rate began to sag in June, approaching 6% before settling into the low 5s. The overall upward trend has weighed on home sales. Mortgage rates have been rising above 6% since September 2022, as the Fed's message of higher rates for longer gets underway.
The 30-Year Fixed-Rate was 6.11% while in September 2021, it was 2.90%. The supply is still low and with all of these factors considered, at this time, it is unlikely that the Orange County housing market will see any significant price decline in 2022 or 2023. Here's how much buyers would need to pay for housing in Orange County County (source: CAR).
- The median price of a one-bedroom house in Orange County is $477K. With 20% down, the monthly payment = $2,867.
- The median price of a two-bedroom house is $699K. With 20% down, the monthly payment = $4,197.
- The median price of a three-bedroom house is $989K. With 20% down, the monthly payment = $5,938.
- The median price of a four-bedroom house is $1.70M. With 20% down, the monthly payment = $10,177.
Orange County Housing Market Forecast 2022 & 2023
California Association of Realtors figures released in October showed a slowdown in the Southern California housing market, with sales dropping both from the previous month and year. Sales dropped massively if you compare them with last year. Sales of existing homes in Orange County also fell 30.9% from the previous Sept. It was the lowest decline in Southern California. Here's the tabulated market insight into the six-county region of Southern California.
| Sep-22 | Median Sold Price of Existing Single-Family Homes | Sales | |||||
| State/Region/County | Sept. | Aug. | Sept. | Price MTM% Chg | Price YTY% Chg | Sales MTM% Chg | Sales YTY% Chg |
| 2022 | 2022 | 2021 | |||||
| Southern California | $783,380 | $795,000 | $755,000 | -1.50% | 3.80% | -3.80% | -32.60% |
| Los Angeles | $891,770 | $854,960 | $886,050 | 4.30% | 0.60% | 2.40% | -31.70% |
| Orange | $1,200,000 | $1,200,000 | $1,100,000 | 0.00% | 9.10% | -5.80% | -30.90% |
| Riverside | $600,000 | $620,000 | $570,000 | -3.20% | 5.30% | -2.40% | -31.00% |
| San Bernardino | $480,000 | $472,750 | $437,000 | 1.50% | 9.80% | -2.00% | -37.20% |
| San Diego | $899,000 | $885,000 | $850,000 | 1.60% | 5.80% | -9.50% | -33.20% |
| Ventura | $850,000 | $884,000 | $815,000 | -3.80% | 4.30% | -20.50% | -36.00% |
The housing market in Orange County continues to moderate from the frenetic levels of the past two years. In recent weeks, interest rates are back on the rise, and fewer homes are selling for more than the asking price. As we write this, the current average rate for the benchmark 30-year fixed mortgage is 7.32%, increasing 15 basis points over the last seven days. There is less competition among potential purchasers, which could force them to engage in a bidding war. There is now less upward pressure on home prices.
The cooling trend is also increasing the number of available homes on the market. Active listings have reached their highest level (statewide in California) since the beginning of the pandemic. It is anticipated that home price growth will continue to decline in the coming months, culminating in year-over-year decreases by the fall of 2023. As the market continues to normalize, a year-over-year price drop may occur later this year in the Orange County housing market.
Sources:
- https://www.car.org/
- https://www.redfin.com/county/332/CA/Orange-County/housing-market/
- https://www.realtor.com/realestateandhomes-search/Orange-County_CA/overview
- https://www.noradarealestate.com/blog/california-housing-market/
- https://www.noradarealestate.com/blog/southern-california-housing-market/
