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High mortgage rates. Persistent inflation. A higher cost of living. Add declining buyer demand and longer market times, and it is easy to understand why today's housing market is drawing comparisons to the years leading into the Great Recession.
But the similarities largely end at the surface.
In 2006, Orange County inventory climbed to roughly 16,000 homes. By 2007, it was approaching 18,000. Today, there are 4,952. Lending standards are considerably tighter, homeowners hold substantially more equity, 40% have no mortgage at all, and distressed sales remain exceptionally rare.
The latest Orange County Housing Report identifies three ingredients behind the previous housing crash: excessive supply, weak demand and homeowners who had to sell. Today, only one of those conditions is present: weaker demand.
And when we look more closely at South Orange County, that distinction becomes even clearer.
WHAT “NOW” LOOKS LIKE LOCALLY
San Clemente currently has 123 active listings, 49 homes under contract and 55 homes that closed in the past 30 days. For perspective, 40 to 50 active listings would be low, while 200 to 300 would be very high.
Against the number of homes going under contract and closing, 123 active listings doesn't leave a lot of shelf life in the inventory. Buyers aren't confronting a market flooded with choices. In many cases, they're frustrated because there simply aren't enough properties available.
Pricing is changing, too.
New listings are coming to market much more in tune with current economic conditions and where fair market value actually sits. We're seeing less pushing of the price, with some homes even positioned slightly below perceived market value.
Those homes are getting attention. Multiple offers are still happening, and we're seeing quite a few properties ultimately close above asking.
Similar dynamics are playing out in Dana Point and San Juan Capistrano. Despite an economic backdrop that suggests housing should be moving much more slowly, the South Orange County market continues to move surprisingly well.
THE TAKEAWAY
Today's market has some of the symptoms people associate with a housing downturn: higher rates, weaker demand and longer market times. But what's underneath those numbers is very different.
There isn't an enormous buildup of inventory. There isn't widespread homeowner distress. And here in South Orange County, the relationship between available inventory, pending sales and recent closings shows a market that continues to move.
For sellers, accurate pricing matters. Homes coming to market close to fair market value, and sometimes slightly below it, are generating competition.
For buyers, higher rates haven't translated into an abundance of choices. When the right home comes along and is priced well, competition can still happen quickly.
Then was a market overwhelmed by supply and distress. Now is a market constrained by affordability and limited inventory. That's a very different housing story.
📲 Let’s talk about what the numbers mean for you: 949-463-0400 – Doug