Orange County Housing Report:

T H E W I N T E R M A R K E T

A F T E R  A N  E X C E P T I O N A L L Y  C H I L L Y  S T A R T  T O  T H E  Y E A R , T H E  O R A N G E  C O U N T Y  H O U S I N G  M A R K E T  I S  A B O U T  T O H E A T  U P  W I T H  S O A R I N G  B U Y E R  D E M A N D .

So many are anticipating the return of the summer Olympics to Los Angeles in 2028. The opening ceremonies, track and field, swimming, basketball, soccer, gymnastics, cycling, volleyball, and a variety of other sports are all converging on Southern California in 2½ years. Just about everyone has their favorite. For those who want to attend one of the events in person, the presale registration opened up on January 14 at 7 a.m. There were over 1.5 million ticket registrations in the first 24 hours, the most in Olympic history. There was so much interest that wait times exceeded an hour. Demand for tickets surged, and the LA28 Olympic Committee expects to sell 14 million tickets, breaking the record set at the Paris 2024 Games. 

Now that housing has reached mid-January, it feels like tickets just went on sale for buyers to tour houses, write offers, and secure their next home. While the Orange County housing market is not going to set any sales records, housing demand will surge higher over the next several weeks. Housing is transitioning from the Holiday Market, which runs from mid November through the first couple of weeks of the New Year, the slowest time of the year with very little buyer activity, to the Winter Market, running from mid-January through mid March, when buyer demand explodes higher. The supply of available homes increases, but at a slower pace than demand, leading the market to accelerate noticeably. Regardless of the year or economic conditions, the housing market always improves dramatically starting in mid-January. Buyer demand (a snapshot of the number of new pending sales over the prior month) rockets higher. It started the Winter Market last year with 988 pending sales, and by mid-March, demand had grown to 1,665, an increase of 677, or 69%. In 2023, it jumped by 67%, and in 2024, it grew by 52%. The 3-year average before COVID (2017-2019) was a 47% rise.

The supply of available homes, on the other hand, rises much more slowly than demand. The inventory to start the Winter Market last year was 2,759, and by mid-March, it had grown to 3,419, an increase of 660 homes, up 24%. In 2023, it dropped by 15%; in 2024, it rose by 10%. The 3-year average before COVID was a 12% increase. 

O R A N G E C O U N T Y  D E M A N D Y E A R - O V E R - Y E A R
With demand soaring while inventory climbs more slowly, the market accelerates rapidly from week to week. Last year, the Expected Market Time (the number of days it takes to sell all Orange County listings at the current buying pace) was 84 days in mid-January and decreased to 62 days in mid-March, a noticeable 22-day drop. In 2023, it plunged by 40 days, and in 2024, it dropped by 15 days. The 3-year average decline before COVID was 23 days. Demand will increase substantially from now through mid-March. Today’s 914 demand reading is the lowest since tracking began in 2004. It is very close to the 2023 level of 939 pending sales. The pre-pandemic average was 1,710, a sizable 87% more than today. Nonetheless, there will be a lot more activity. An increasing number of buyers will begin searching for a home. The number of new prospective buyers will outpace the number of homes coming on the market, even at these muted levels.

Excerpt from Stephen Thomas OC Housing