The Orange County housing market finally showed the long awaited signs of meaningful price appreciation in the first quarter of 2016, with prices up significantly for the first time in almost 10 years.
Sales. Orange sales were up yet again, rising 31% from last year and now up over 28% for the rolling year. This was nothing new – we have now seen sustained increases in Orange transactions for almost four years, with sales up six quarters in a row and 15 out of the last 16. Indeed, we are now seeing sales at historically high levels, with Orange closing over 3,000 sales for the rolling year for the first time since 2007 at the tail end of the last seller’s market.
Prices. What’s new is that for the first time in years, we saw some meaningful price appreciation in Orange, with prices up 3% on average, almost 4% at the median, and up just a tick in the price per square foot. This was important because prices had fallen every single calendar year since 2007 – that’s eight straight years of year-on-year price depreciation. As a result, home prices today are down almost 30% from the height of the market. But for the first time, Orange homeowners have reason to be hopeful that the trend is moving in a positive direction.
Negotiability. Certainly, the negotiability indicators support the view that Orange is due for continued meaningful price appreciation. The months of inventory in Orange fell again in the first quarter, dropping below 10 months for the first time in over 12 years. Similarly, the days on market fell again and the listing retention rate went up a full point, showing that homes are selling more quickly and for closer to the asking price – all of which tends to drive price appreciation.
Condominiums. The condo market also surged, rising over 43% for the quarter and up almost 45% for the year. So we have a lot of demand. Unfortunately, we’re not yet seeing that demand impact pricing, which was down across the board. As we’ve noted before, the problem with Orange condos is that they’re priced too close to single.family homes. If we continue to see meaningful appreciation in single.family prices, that will arrest the slide in condo prices.
Going forward, we believe that Orange is finally seeing the light at the end of the dark tunnel it entered in 2008. We expect that demand will stay strong through a robust spring market that will continue to drive meaningful price appreciation through 2016 and for several years to come.