Orange County Market Update - August 2023

Big Story Data

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The Local Lowdown

Quick Take:

• The median single-family home and condo prices landed at the third highest price levels on record, only 2% below the all-time highs reached last year.
• Active listings in Orange County fell from June to July, continuing a 12-month downward trend. New listings are selling incredibly fast, highlighting the challenges of buying a home in a desirable market.
• Months of Supply Inventory has declined significantly in 2023, homes are selling more quickly, and sellers are receiving a greater percentage of asking price, all of which highlight an increasingly competitive environment for buyers.

Note: You can find the charts/graphs for the Local Lowdown at the end of this section.

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Home prices only 2% below all-time highs

In Orange County, the housing market is always experiencing high demand, especially in the spring and summer months. The median single-family home price rose 15.6% year to date, while condo prices were up 11.6%, both landing at the third highest price level on record. Single-family home prices and condos are only 2.2% and 2.7% below the record highs, respectively. Although prices typically peak in May or June, 2023 is not a typical year. Prices could easily inch higher in August even if demand softens.

Typically, demand begins to decline this time of year, so the consistently low supply may become less of an issue. However, less of an issue doesn’t mean a non-issue. Quality new listings will certainly be sold quickly, while less desirable homes will sit on the market. This isn’t unusual, but it’s more apparent due to current mortgage rates. Potential homebuyers aren’t nearly as willing to pay a premium for a fixer upper as they were in 2020 and 2021.

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Inventory hits new low for 2023 after year-long downward trend

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Months of Supply Inventory hits 12-month low, indicating a strong sellers’ market

Months of Supply Inventory (MSI) quantifies the supply/demand relationship by measuring how many months it would take for all current homes listed on the market to sell at the current rate of sales. The long-term average MSI is around three months in California, which indicates a balanced market. An MSI lower than three indicates that there are more buyers than sellers on the market (meaning it’s a sellers’ market), while a higher MSI indicates there are more sellers than buyers (meaning it’s a buyers’ market). MSI fell significantly this year, indicating the market moved from a balanced market to a sellers’ market in the first quarter. MSI remained low in the second quarter for both single-family homes and condos, falling further still in July. The sharp drop in MSI occurred due to the higher proportion of sales relative to active listings and less time on the market.

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Local Lowdown Data