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After an extremely cool start to the year, the Orange County housing market is heating up with spiking demand and a substantial drop in market time.
The slow pace of the first couple weeks of January is quickly fading as housing transitions to the Winter Market. The Winter Market runs from mid-January through mid-March. In mid-March, housing transitions to the busiest time of the year, the Spring Market. Winter essentially sets up the spring. This year’s Winter Market will be no different; the frozen housing market has already begun to quickly thaw, ramp up, and grow hotter from week to week. The season is characterized by the inventory increasing slightly, buyer demand surging higher, and the Expected Market Time, the speed of the market, dropping substantially.
With the holidays in the rearview mirror, many buyers who placed their search for a home on hold due to their desire to enjoy all the festivities of the season, return and jump right back into the housing market. As a result, demand increases rapidly. In the past two weeks, the start of the Winter Market, demand climbed from 988 to 1,340, up 36% or 352 pending sales. Demand will continue growing weekly in February and March, building momentum until it peaks in the spring. Expect demand to closely resemble 2023 and 2024 demand levels.
In the meantime, the active inventory, the supply of available homes, increases slightly as many homes that come on the market, especially those priced right and in excellent, turn-key condition, are snapped up quickly, many times with multiple offers. In the past two weeks, the inventory has risen from 2,759 to 2,821, up 2% or 62 homes. In February and March, the supply of available homes will slowly increase. From there, as housing transitions to the Spring Market, the inventory will grow considerably faster as more homeowners opt to sell their homes during the springtime than at any other time of the year.
What we're seeing:
→ Market starts to change Superbowl weekend
→ Active inventory on the rise, but slightly lower pace than last year
→ Demand changed significantly
→ Demand is ahead of last year's pace
→ We are starting to see the average days on market come down
→ Strong demand for single level homes
What we can expect:
→ Market is heading in a great direction, it will be a busy spring market
→ We could see average days on market around 40 days in the spring, based on past history
Orange County Housing Market Summary:
- The active listing inventory in the past couple of weeks increased by 62 homes, up 2%, and now sits at 2,821. In January, 17% fewer homes came on the market compared to the 3-year average before COVID (2017 to 2019), 528 less. Yet, 473 more sellers came on the market this January compared to January 2024. Last year, there were 1,942 homes on the market, 879 fewer homes, or 31% less. The 3-year average before COVID (2017 to 2019) was 4,843, or 72% extra.
- Demand, the number of pending sales over the prior month, surged by 352 pending sales in the past two weeks, up 36%, and now totals 1,340, its largest rise since the start of February 2023. Last year, there were 1,290 pending sales, 4% less. The 3-year average before COVID (2017 to 2019) was 1,2,160, or 61% more.
- With demand surging compared to the slight rise in supply, the Expected Market Time, the number of days to sell all Orange County listings at the current buying pace, plunged from 84 to 63 days in the past couple of weeks. Last year, it was 45 days, noticeably faster than today. The 3-year average before COVID (2017 to 2019) was 70 days, slightly slower than today.
- In the past two weeks, the Expected Market Time for homes priced below $750,000 decreased from 68 to 52 days. This range represents 18% of the active inventory and 22% of demand.
- The Expected Market Time for homes priced between $750,000 and $1 million decreased from 58 to 43 days. This range represents 14% of the active inventory and 21% of demand.
- The Expected Market Time for homes priced between $1 million and $1.25 million decreased from 69 to 49 days. This range represents 10% of the active inventory and 12% of demand.
- The Expected Market Time for homes priced between $1.25 million and $1.5 million decreased from 63 to 42 days. This range represents 10% of the active inventory and 14% of demand.
- The Expected Market Time for homes priced between $1.5 million and $2 million decreased from 80 to 60 days. This range represents 13% of the active inventory and 14% of demand.
- The Expected Market Time for homes priced between $2 million and $2.5 million decreased from 89 to 60 days. This range represents 6% of the active inventory and 7% of demand.
- In the past two weeks, the Expected Market Time for homes priced between $2.5 million and $4 million decreased from 149 to 132 days. For homes priced between $4 million and $6 million, the Expected Market Time decreased from 272 to 183 days. For homes priced above $6 million, the Expected Market Time decreased from 595 to 333 days.
- The luxury end, all homes above $2 million, account for 29% of the inventory and 10% of demand.
- Distressed homes, both short sales and foreclosures combined, comprised only 0.1% of all listings and 0.6% of demand. Only one foreclosure and three short sales are available today in Orange County, with four total distressed homes on the active market, down two from two weeks ago. Last year, seven distressed homes were on the market, similar to today.
- There were 1,634 closed residential resales in December, up 25% compared to December 2023’s 1,310 and up 3% from November 2024. The sales-to-list price ratio was 99.5% for Orange County. Foreclosures accounted for 0.1% of all closed sales, and there were no short sales. That means that 99.9% of all sales were good ol’ fashioned sellers with equity.