The Orange County housing market surged yet again in the fourth quarter of 2016, with clear signs of meaningful price appreciation for the first time in years.
Sales. Orange single-family sales were up yet again, rising almost 19% from last year’s fourth quarter, and finishing the full 2016 calendar year up almost 25%. This continues a trend we’ve been watching for almost five years, with Orange sales now up nine quarters in a row and 18 out of the last 19. Even more telling, the 3,542 yearly single-family home sales were the most since 2005, and were up 112% from the bottom of the market in 2011.
Prices. These sustained increases in buyer demand are finally having a meaningful impact on pricing, with single-family home prices up a tick on average and almost 4% at the median compared to last year’s fourth quarter. More importantly, prices were up ever-so-slightly for the year, just under 1% on both the average and the median. That may not seem like much, but it was the first time that Orange calendar-year prices rose since 2007.
Inventory. The available inventory continues to tighten in the single-family market, closing in on the six-month market that usually indicates a tight seller’s market. As inventory falls, we would expect even more upward pressure on pricing.
Condominiums. The Orange condo market showed signs of life, with sales up over 10% for the quarter and finishing the year up almost 9%. The condo market has struggled for years in Orange, particularly as the price point between condos and houses narrowed. But that gap might be widening as single-family home prices accelerate, which would likely stop the bleeding in the condo market pricing.
Going forward, we believe that the Orange County housing market is looking forward to its best year since the height of the last seller’s market. The fundamentals are strong: demand is high, prices are still at attractive 2003-04 levels, interest rates are at historic lows, and the economy is generally improving. With inventory declining, we expect to see more meaningful price appreciation in 2017.