The housing marketing in Orange County, CA is incredible right now. This is always one of the highest value real estate markets in America. To understand the market and what’s going on with it, we need to take a look at the number of days a listing stays on the market before it sells and the inventory of available homes on the market.
The number of new listings on the market for single-family homes dropped from a high of 1,801 homes in August to just 1,475 homes in September. This means that there aren’t enough new homes going on the market to replace the supply from month to month even though the demand for homes remains very high.
The number of homes going under contract in August was about 1,671. By September that number was down to 1,501 homes going under contract. There were only 1,475 new homes going on the market in September, so the number of homes going under contract dwindles faster than they can be replaced.
There’s natural attrition on the market as we head into the holidays. Nobody wants to sell their home during the holidays while everyone wants to buy a new home for their family for Christmas. So, the lack of new homes coming onto the market is slowing the pace of home sales while driving up the price. Homes are flying off the market in an average of just three weeks.
The average single-family home in August cost $1.53 million. By September, the price went up by $100,000 to $1.63 million. Meanwhile, the price of all types of housing in Orange County was $1.1 million. To afford a $1.1 million mortgage, home buyers need an annual income of $200,000.
According to a California Association of Realtors report, affordability will continue to be an issue for the Southern California housing marketing well into 2022 and 2023, especially for buyers in Orange County. Only 23% of residents of California will be able to afford to buy a home next year. Low-wage workers and hospitality sector employees’ financial situation will worsen while the middle and upper-class workers’ financial situations will improve in 2022.
The economy is continuing to recover from the losses realized during the beginning of the pandemic. Working from home, historically low interest rates, a shortage of available homes on the market, and a labor shortage driving up wages have created a sort of frenzy in the California real estate market. From 2019 to 2021, the price of homes in California jumped 20%. The pace of homes sales in Orange County won’t last indefinitely.
Though there are well-qualified buyers in Orange County, interest rates are expected to rise next year. Naturally, the market will cool as the interest rate rises. The slowing pace of home sales will offer a little bit of relief for homebuyers who are struggling to compete for homes that are on the market now.
Meanwhile, California as a whole has experienced a 2.3% decrease in home prices since August. The market is cooling, which is a relief for homebuyers. Going into 2022, the American aspiration of homeownership is still going strong, but the chances of it actually happening for Californians will increase. The interest rate for a mortgage will remain below 3.5% and the supply of available homes will increase.
If you’re looking for a home in Orange County, let Potempa Team help you find financing. Our team of mortgage specialists has lent California homebuyers more than $1 billion in the last year. Let us help you buy the home of your dreams. Contact us today or apply for a home mortgage now.