Orange County Housing Report:

EASING INTO SUMMER

ORANGE COUNTY HOUSING HAS OFFICIALLY TRANSITIONED TO THE SUMMER MARKET, WHEN THE INVENTORY RISES AND PEAKS,

DEMAND SLOWLY FALLS, AND THE MARKET SLOWS.

Graduates have thrown their caps into the air, celebrating the turning of a new chapter. Families are carefully packing their suitcases and boarding planes for a much-needed vacation. At the public pool, the smell of sunscreen permeates the air, as the hot sun beckons everyone to jump into the water. From cover band concerts to blockbuster movie releases to a hike on an intermediate trail, all of summer's many distractions have arrived. As everyone turns their attention to summer activities, the housing market evolves and shifts slightly downward. In terms of demand and market speed, the Spring Market is the busiest and strongest time of the year for housing. It is when many families look to isolate a home, write a purchase contract, and then move during the summer when the kids are on summer break. Many families and individuals still have housing goals, but it often takes a back seat to all the fun that summer has to offer. 

The various seasons of the housing market do not necessarily align precisely with the official start and end dates of the four seasons. Summer officially begins on June 21, the summer solstice, the longest day of the year. Yet, in housing, it aligns with when the kids are out of school, around the end of May. The Summer Market spans June, July, and August. By the end of August, the kids are back in school, and housing transitions to the Autumn Market.

The Orange County, demand (a snapshot of the number of new pending sales over the prior month) eases as many summer activities temporarily pause buyers’ efforts in securing a home. The supply of available homes slowly rises until it peaks sometime between Julyand August. Until the inventory isolates that peak, the market will continue to slow weekly. Last year, the inventory was 4,645 homes at the start of June, peaked at 5,071 at the end of July, and fell to 4,869 by the end of August. Overall, the inventory still climbed by 5% from June to August. At the same time, demand decreased from 1,633 to 1,559 pending sales, a 5% decline. The Expected Market Time increased from 85 to 94 days, up 9 days. In 2024, the inventory ballooned by 29%, demand dropped by 10%, and the Expected Market Time increased by 22 Days, a major deceleration, from 51 days in June to 73 days by the end of August. In 2023, with the inventory growing by 9% and demand falling by 8%, the Expected Market Time increased from 41 to 49 days, up 8 days. In looking at the 3-year average before the pandemic (2017-2019), the inventory grew by 5%, demand dropped by 6%, and the Expected Market Time increased from 70 to 79 days, up 9 days.

Many homeowners mistakenly think summer is the best time of the year to place their homes on the market. There is an elevated number of homes coming to market, yet demand has already hit its peak in the spring. The supply outpaces buyer demand. The extra homes placed on the market accumulate until housing reaches its summer peak. Demand peaked at the beginning of May at 1,678 pending sales and has dropped by 72 since, a 4% decline. At the same time, the supply of available homes has grown from 4,307 in May to 4,681 today, up 374, or 9%. The market slowed from 77 to 87 days amid increasing seller competition. The Orange County housing market will continue slowing until the supply stops growing.

Excerpt from Stephen Thomas OC Housing