Orange County, CA Real Estate Market Trends in 2017

After several years of above-average price growth, the real estate market in Orange County, California appears to be cooling down. At least where home prices are concerned. This is based on a recent forecast for the Orange County housing market, issued earlier this month by Zillow.

Orange County Real Estate Trends: Spring – Summer 2017

Home prices within the Orange County housing market rose to an all-time high in April 2017, during a particularly hot spring buying season. According to a report released by the real estate data firm CoreLogic earlier this month, the median home price in Orange County, California rose to $675,000 in April.

That was an increase of $30,000 from the same time last year — and a whopping 73% gain over the last five years.

That’s the first thing home buyers should know about Orange County real estate market trends in 2017. House values have been trending north for the last few years.

Related: Is now the best time to buy?

Housing demand is particularly strong within the lower price ranges, and also among new construction. At the upper end of the market, where luxury homes reside, things are much cooler. There’s less buyer competition in the higher price range, and properties therefore tend to take longer to sell.

But in the “starter home” range, the Orange County real estate market is still pretty active with a lot of competition among buyers. This is partly the result of limited inventory.

According to the latest “Market Minute” report from the real estate company Long & Foster, there were 4.4 months of supply (i.e., homes for sale) in Orange County as of April 2017. That marked a decline of 39% from the same month last year, when there were 7.1 months of supply.

For reference, a six-month supply is generally considered to be a “balanced” real estate market. Less than that is a seller’s market, while a higher supply indicates a buyer’s market. So in terms of inventory, current Orange County real estate trends are indicative of a seller’s market. There aren’t enough homes for sale to meet the current level of demand.

And demand is strong. According to a recent article in The Orange County Register: “Despite a lack of homes to buy, strong demand continued to push sales upward as well, especially in the new housing tracts where builders were experiencing their best April in 14 years.”

Home Price Forecast Into 2018: Smaller Gains Ahead?

The Orange County housing market has experienced above-average price gains over the last few years. If you look at home-price appreciation trends nationally for the last few decades, you’ll see that the average annual increase is 3% to 5%. (And probably closer to 3%.)

According to CoreLogic, home values in Orange County, California rose by 73% over the last five years or so. That comes out to an average gain of 14.6% per year — much higher than historical averages for U.S. home prices.

What’s more, house values in the county are outpacing job and income growth by a wide margin. This is partly why we are seeing a slowdown in price growth in the Orange County housing market. It’s a much-needed return to normalcy.

In May 2017, the real estate economists and analysts at Zillow predicted that the median home value in Orange County would rise by less than 1% over the next 12 months. This too could be viewed as a sign that the market is correcting itself after years of over-heated growth. From an economic standpoint, this would be a good thing.

Disclaimer: This article includes data, statistics and forecasts provided by third parties not associated with our company. We have compiled them here as an educational service to our readers.