The Orange County housing market surged again in the third quarter of 2016, with sales up dramatically and, more importantly, the first signs of meaningful price appreciation since the 2008-09 financial crisis.
Sales. Orange single‑family sales were up yet again, rising over 18% from last year and now up over 25% for the rolling year. This continues a trend we’ve been watching for over four years, with Orange sales now up eight quarters in a row and 17 out of the last 18. And the 3,400 single‑family sales for the rolling year marked the highest yearly total we’ve seen since the third quarter of 2006 ‑‑ exactly ten years ago, at the top of the last seller’s market.
Prices. These sustained increases in buyer demand are finally having a meaningful impact on pricing, with prices up across the board in the third quarter: up almost 4% on average, 3% at the median, and 4% in the price‑per‑square foot. This is all great news for Orange homeowners, who have been impatiently waiting for pricing to rebound since the 2008-09 financial crisis.
Negotiability. The number of available homes for sale continues to fall, with inventory dropping almost 38% and now down to about eight months for single‑family homes and six months for condos. According to industry standards, anything below six months of inventory indicates a “tight” market that usually drives price appreciation. The other negotiability factors were mixed, with homes selling for closer to the asking price but days‑on‑market relatively flat.
Condominiums. The Orange condo market was not as active, with sales down almost 8% for the quarter. But prices showed similar signs of rebounding, with the average up almost 2%, the median up 3%, and the price‑per‑square foot spiking 7%. If the single‑family market continues to heat up, we expect that the condo market will follow.
Going forward, we believe that the Orange County housing market is looking at its best year since the height of the last seller’s market. The fundamentals are strong: demand is high, prices are still attractive, interest rates are at historic lows, and the economy is generally improving. We expect a strong finish for the year, and meaningful price appreciation in 2017.