The real estate housing market in Orange County is on the rise!
So far, 2021 has been a wild ride in the world of real estate. Like many parts of the country, Orange County has seen home values soar in the last few months, with the median home price increasing by 9.1%.
The median price of homes in Orange County increased by 13.3% compared to last year, selling for a whopping $850K per home.
This hot housing market shifted from 32 days on the market as opposed to 39 from just one year ago and 3,261 houses were sold this March versus 2,391 during that same time period – an increase of 27% according to Zillow.
Real estate inventory levels have decreased 64% in the previous year, and the average number of days on the market is only 26.
Zillow’s housing market analysts forecast that the Orange County estate market could see even more significant real estate gains in the upcoming year, predicting another 10% in price appreciation.
What is Causing The Rapid Acceleration of Prices?
There is no denying that we are living through some very strange times. Who could have predicted that the orange county housing market would be on fire amid a pandemic?
The root of the rapid acceleration of real estate and home price values in Orange County can be attributed mainly to two factors: low inventory and low interest rates.
With fewer homes available for sale in orange county and the increased incentive of low interest rates, the competition to purchase a home has never been more intense.
In all of Orange County, there were only 2.675 homes for sale at the start of 2021. This is incredibly low and nowhere near the number of homes available for a “balanced housing market.”
The low inventory in Orange County is causing real estate bidding wars, causing buyers to pay well over the list price for a home.
Appraisals can usually keep real estate values and home prices in check. Still, some buyers in Orange County have decided to waive appraisal contingencies to make their offer more appealing to the seller. They then make up any difference between appraised value and purchase price in cash.
Another less impactful factor in the appreciation of home values is that more millennials are ready and able to enter the housing market.
They have been saving for years, plus many of them received thousands in stimulus money and are prepared to purchase a home.
Low inventory is making the housing market in Orange County challenging for buyers.
Luckily, more Orange County homeowners are listing their homes and this should help to reduce competition so that it’s easier for people looking to buy a home soon!
Will the Orange County Real Estate Bubble Burst?
Seeing values in Orange County appreciate at such an alarming pace has made people worried that we could be headed toward another real estate bubble that will inevitably burst.
So far, analysts do not see this happening in Orange County.
The reason for increased demand and higher prices in Orange County is so much different from those in the years leading up to the real estate crash of 2008. Lending requirements are much more strict than they were in the years leading up to the great recession.
The majority of the home buyers are purchasing primary residences instead of people who were buying second or third homes as investments or vacation homes.
Construction of new homes has also slowed significantly due to the pandemic causing more pressure on the Orange County housing market.
Once construction is able to pick up again, and more homes will be available, the acceleration of prices should slow a bit. Although most analysts predict the housing market will remain strong in Orange County for the foreseeable future. This is partly due to interest rates expected to remain relatively low throughout 2021-2022.
The OC Register predicts that demand for homes in Orange County is only going to increase since the elections are over with, the COVID vaccine becomes more widely distributed, and optimism in the economy returns as the state continues to open.
In Orange County, the largest source of jobs, Disneyland, plans to open at the end of April, which will be positive for the Orange County housing market, especially in the city of Anaheim.
President Biden is also floating the idea of giving first-time homebuyers a $15,000 tax credit which would further increase the demand for homes without seeing a change in inventory. It will be interesting to see how this plays out.
What Does This Mean For Orange County
It appears that the housing marketing in Orange County will continue to be hot through the spring and summer seasons.
Since prices in Orange County will continue to rise due to a lack of inventory, current homeowners have an excellent opportunity to take advantage of it. If you have been thinking of selling a home, there may not be a better time to do so.
The demand for homes in Orange County will continue to be extremely strong in real estate through the Summer Market.
The level of competition in Orange County is driving buyers to extend slightly at price compared to the most recent sale; so, we can expect appreciation to hit close to 10% by the end of the year.
Experts predict that the highest level of demand will occur in Orange County from January through July and then start to slow, as it usually does, in the fall. That means if you want to sell, you should get on that immediately.
Is It Smart To Buy A Home In Orange County
You may be thinking that buying a home in Orange County sounds like a bad idea, but that is not true.
Since interest rates are expected to remain near record low levels until some of the fears of COVID have died down, now is an excellent time to buy a home since your money will stretch further.
Once the vaccine has been widely distributed and people have more trust in the economy due to positive job reports, we can expect rates to rise.
It would not be surprising to see mortgage rates rise by the end of 2021 from their low of high 1’s and low 2’s to the mid-to-low 3’s by year’s end.
This increase could potentially cost hundreds of dollars each month in mortgage payments. If you want to buy a home in Orange County, it is maybe best to do so now.
With so much competition, the process is taking a bit longer to find a home and have your offer accepted on it than usual. It is important to make sure you work with a reputable mortgage professional to get pre-approved.
Final Thoughts on Orange County Real Estate Market
Even though the real estate market in Orange County is expected to see a double-digit increase in home values by the end of this year, keep in mind that the real estate market is cyclical.
It always has been and always will be
Look at the current real estate conditions and determine if buying or selling is the right financial move for you at this time.
Buyers will most likely have a much more stressful and frustrating experience in real estate in the current housing market.
Still, in the end, home buyers will be rewarded with a home to call their own and instant equity.
You will have to be prepared to pay a little more out of pocket on items that can usually be negotiated, like homeowners association fees or repairs.
If you have any questions about the current real estate market conditions or are ready to explore your mortgage options in Orange County, start here. We will make the mortgage and real estate process easy and simple.
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