In Orange County, California, the real estate market is going strong. As 2016 comes to a close and a new year approaches, many are wondering if that strength will continue to build in 2017, especially with talk of rising rates. In today’s post, we’ll cover the major Orange County real estate market trends from 2016 and offer a little insight into 2017’s market predictions.
Orange County, CA Home Prices
Orange County has a lot to offer, especially when it comes to beautiful homes. From lavish multi-million dollar estates to more modest, yet equally fine homes in the high $700,000s, this region is brimming with luxury real estate. The lower end of the market isn’t altogether unrepresented, either. Efficient condo units with attractive amenities are offered at exceedingly affordable prices, like this 1 bed, 1.5 bath unit in an upscale 55+ resort community, priced at only $24,000.
Back in May, The Orange County Register reported that area median home prices returned to their pre-recession peak at $645,000. According to market analysts and industry professionals, the boost in prices was likely due to a combination of high demand, low mortgage rates and a shortage of entry-level homes on the market. This helped push the median home price for Orange County back to the June 2007 peak. When the median price hit $645,000 in April 2016, Orange County became the first Southern California county to get back to pre-recession prices, according to data from CoreLogic.
Although prices have returned to peak levels, making Orange County homeowners quite happy, experts tend to agree that today’s market isn’t identical to the housing scene of nearly 10 years ago. Thanks to historically low interest rates, monthly mortgage payments are quite a bit lower now than they were in ’07, and more stringent lending guidelines have helped protect the market from experiencing another housing bubble.
Orange County Real Estate Inventory
Inventory in Orange County remains fairly tight, as is true throughout most of the country. Naturally, this has been a big factor in rising home prices.
According to data from Realtor.com, there are currently 7,421 homes for sale in Orange County, CA and 3,200 homes for rent. Those aren’t necessarily bad numbers as far as total inventory goes; however, the issue seems to be a lack of inventory in the lower-tiered real estate market. For example, there are nearly 650 homes for sale in the Irvine area, but the median list price is a staggering $959,000. In areas with lower price tags, such as Laguna Woods, the median price is $299,999 but the inventory of homes for sale is slashed down to less than half.
Here’s a look at inventory levels in our area, according to Realtor.com*:
478 homes for sale
163 homes for rent
$550,000 median listing price
- Yorba Linda
279 homes for sale
42 homes for rent
$949,000 median list price
*Data collected 12/21/2016; data subject to change
With fewer homes to choose from in the lower end of the housing market, first time buyers will likely face more challenges from competition than buyers with more borrowing power and higher budgets. That’s why taking steps like improving your credit, getting pre-approved and getting all documentation in order ahead of time can help buyers in this segment improve their chances.
Predictions for 2017
Rates have been slowly rising since last month and are likely to continue into 2017. However, with interest rates at the lowest they’d ever been in history, a small increase over the next year is unlikely to cause any ill effects in the market. What experts are more concerned with is the lack of inventory driving prices higher and higher. Still, even with a surge in pricing due to fewer homes on the market, Orange County’s demand for homes is likely to stay strong, as economic improvements help put more Californians in better positions to become homeowners.
According to the 2017 Market Outlook from the California Association of Realtors, single-family home resales should see a 1.4% increase from 407,300 (predicted total for 2016) to 413,000 (forecast total for 2017). As for prices, the Association predicts a 4.3% increase in median price from $503,900 at the end of 2016 to $525,600 in 2017. They also predict the average interest rate on a 30 year fixed rate mortgage to rise from 3.6% in 2016 to 4.0% in 2017.
If you’re on the fence about locking in a California mortgage rate now, you may want to discuss the options with your loan officer sooner rather than later. At Trilogy Mortgage, we offer personalized service and mortgage consultations for home buyers of all budgets and backgrounds. Whether you’re interested in purchasing your first home in Anaheim, expanding your real estate investment portfolio in Yorba Linda, or simply moving up to a bigger, better house in Placentia, we’ll help you find the right financing program for your needs and assist you with your rate lock strategy. Call (800) 939-4177 or click here to get started.