The number of homes for sale in Orange County is “the lowest level since tracking began in 2004,” according to the most recent Orange County Housing Report.
Furthermore, the federal regulator who determines the size of conforming mortgages in the county is likely to increase the size of mortgages that can be purchased by federally backed mortgage buyers from about $822,000 to well over $950,000. This will make it easier for more buyers to afford a home in the high-cost county.
Low supply with an expected increase in demand will both support higher housing prices going forward.
Of course, the housing market can shift quickly if there is some negative economic shock, but, all else equal, higher prices are the most likely way the current demand-supply imbalance is likely to reach equilibrium in the short run.
Longer term, higher density, and new home building may actually reduce home prices, but those factors take years to take effect, especially in California where high land costs and high environmental regulation make it difficult for home builders to assemble building sites and start construction.
But, for now, “there are disproportionately more buyers than there are homes to purchase,” according to the report.
Currently, there are only 1,793 homes for sale—less than one-third of the pre-pandemic three-year average of 5,822 homes for sale in Orange County.
The author of the Orange County Housing Report, Steven Thomas, expects the number of homes for sale in the county to fall to only about 1,500 by the end of December. Many homeowners stop trying to sell their homes as Thanksgiving and the December holidays approach.
Meanwhile, the number of homes that went into escrow over the past month, a proxy for demand, is 2,322—about 500 more than the number of homes currently for sale.
Looking at the homes that are currently available for purchase, the 596 attached homes (such as condominiums and townhouses) have a median asking price of $598,000.
The 1,197 detached homes currently available for sale in the county have a median active list price of $1.4 million.
The 2,778 homes sold in the county during the month of October sold at an average price of $1,219,585—about $5,500 more than the average listing price. The listing price is the price the home seller was asking.
The Federal Housing Finance Agency will calculate the new mortgage limits later this month. The current maximum loan amount that the federally backed Fannie Mae and Freddie Mac can buy from mortgage originators in high-cost counties such as Orange County is about $822,000.
Housing prices nationally are up about 18.5 percent from August 2020 to August 2021. The FHFA will use its calculation for the 12 months change through September to calculate how much to increase the allowed limit for 2022.
If housing prices for the 12 months ending September have increased at the same 18.5 percent rate as through August, the new limit will be about $974,000.