The Orange County housing market started off 2017 with a bang, showing clear signs of an emerging seller’s market. Not only were sales up yet again, but prices showed the first meaningful signs of appreciation in over 10 years.
Sales. Orange sales surged again, rising over 8% from last year’s first quarter. This continued a trend we’ve been watching for over five years, with quarterly sales now up in 10 straight quarters and in 19 out of the last 20. Indeed, for the rolling year, sales were up almost 20%, and the 3,600 single-family sales were the highest total we have seen since the second quarter of 2006 — at the height of the last seller’s market.
Prices. Orange sales going up is an old story, but prices going up is something new. Home prices spiked in the first quarter, rising over 7% on average and at the median, and rising 5% in the price-per-square foot. Indeed, the increase in the average and median sales price marked the highest quarterly increase since the fourth quarter of 2005. And over the longer term, while the 1.7% increase in the rolling year average sales price doesn’t seem like much, it was the largest yearly price jump since 2007.
Negotiability. The available inventory continues to tighten in the single-family market, with the months of inventory falling almost 34% and now down to the six-month level that usually indicates the border of a seller’s market. Meanwhile, homes are selling more quickly and for closer to the asking price, with the days-on-market falling and the listing retention rate rising.
Condominiums. Even the long-moribund Orange condo market showed signs of life, with sales up over 12% and prices up across the board. We’ve said for years that what the condo market needs is an increase in single-family pricing, to create a gap between houses and condo prices. That might finally be happening.
Going forward, we believe that the Orange County housing market is poised for a big year. 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 strong. With inventory continuing to decline, we expect to see more meaningful price appreciation through the rest of 2017.