- The Orange County Housing Market is being impacted by two economic forces that are pulling it in separate directions. On one side we have a record low supply of homes for sale, which is pulling the market toward continued bidding wars and rapidly increasing home values. On the other side we have rising interest rates which is pulling that market back toward a more balanced level. So far rates haven’t risen high enough to have a meaningful cooling effect on the market, but if rates continue to rise it could begin to slow the market down. I’m Tim Hamilton with StellarQuest Real Estate. If you enjoy watching this video I would really appreciate it if you would like it by hitting the thumbs up button below and subscribe if you like to stay up to date on the housing market. If you’re thinking about buying or selling a home please feel free to call, text, or email me. All of my personal contact information is in the description below. If you’re in Southern California I can personally help you, and if you’re located somewhere else, I can refer you to an experienced local agent in your area.
- It’s hard to describe exactly how severe the lack of available homes for sale is. We currently have just over 1,000 homes on the market in Orange County. You can see in this chart how far off we are compared to last year and the three year average between 2017-2019. In all price ranges, we are down 59% compared to last year, and 77% compared to the prior 3 year average. That means there was about 1.5 times the number of homes for sale at the same time last year, and over 4 times more homes for sale during the 3 year average. The next graph we’re going to look at is a much better visual representation of where we currently are. You can see exactly how far below we are compared to the last 3 years. At this point, the inventory is not expected to grow much until Spring, when more homes start coming on the market. However, if interest rates rise far enough to mute demand, we could see the number start to grow.
- Even with rising interest rates, buyer demand is still at a strong level. Over the past 2 weeks it has grown by 10%. Since the supply of homes for sale is so low, just about every home that comes on the market is sold quickly. If there were more homes on the market buyer demand would most likely be higher than it currently is. As more homes start getting listed for sale the demand number should also grow. With surging demand, and a shortage of homes for sale, the market will most likely only get HOTTER in the short run. The expected market time typically drops to its lowest level sometime in March. When the expected market time drops it means homes are selling faster and the market is getting hotter.
- I want to get specific on why rising interest rates typically has a negative impact on buyer demand. We are going to go through a quick example to show exactly how much the rise in interest rates will impact a buyers monthly mortgage payment. Over the past month interest rates have gone up by about 0.5%. On a $900,000 mortgage that would increase the monthly mortgage payment by $252, which would be $3,027 a year. At 4.25% the monthly payment would rise $608 a month or $7,299 a year. You can see as rates rise, purchasing a home becomes more expensive. As it becomes more expensive, less buyers will qualify to purchase, and some buyers will simply walk away from buying a home despite their ability to buy. Sometimes rising rates can create more buyer demand in the short run as buyers start to rush to purchase a home before rates go up any further.
- Thank you for watching! If you want a copy of the “Orange County Housing Report” please let me know and I can send you a copy. Also feel free to call, text, or email me if you’re thinking about buying or selling a home. There’s a lot I can do to help and I would be happy to answer any of your questions.
StellarQuest Real Estate – Lic. # 02077900
Tim Hamilton
Broker Associate – Realtor®
Lic. #01959966
(714) 486-4086
timsellsca@gmail.com
www.StellarQuest.com