Post-Pandemic, Orange County’s Housing Market is Finally Cooling Off
In the last few years, the COVID-19 pandemic caused a buying flurry in the housing market nationwide, and Orange County was certainly no exception. CEO and partner of Active Realty in Irvine, Suzanne Seini, has insider experience with the chaos of the Orange County housing market in recent years.
“Over the past couple of years, we saw a lot of buyers experience heartbreak,” Seini explains. “So many were trying hard and needed to get into a home because of changes in their lie or growing family, and they couldn’t do it.” With reduced mortgage rates, inventory, and rapidly changing lifestyles, houses couldn’t flee the market fast enough. Seini says that now the city is finally seeing a break from the fast-paced environment. “It’s a little fairer now… [buyers] are in a better position.”
Federal crack-downs on interest rates and inflation have caused many buyers to back off, which is forcing the market to stabilize. A sales associate at Pacific Sotheby in Laguna Beach, Josh Schroeder, compares the housing market to cars speeding on the highway. “Here we are traveling down the highway going the 65 miles per hour speed limit, and then when the pandemic hit, everyone was going 165 miles per hour. The police officer — the Feds have caught up — and real estate is pumping their brakes. Now, we’re going about 75 miles per hour.”
Schroeder embraces this change readily. “There’s nothing wrong with this kind of normalization happening.” The shifting market is changing the public opinion on buying and selling conditions. The Fannie Mae Home Purchase Sentiment Index reported that only 17% of respondents believe now is a good time to buy a home. Between less favorable mortgage rates and slowing home price growth, the intense heat of the Orange County market is bound to be short-lived. However, the market still favors home sellers hand over fist.
In the last few weeks, the expected market time in Orange County dropped from 72 to 67 days, meaning houses stay on the market for only 2 months before they escrow. The market looks like it may maintain its steam throughout the rest of the year. Beyond that, any market time under 90 days is considered a seller’s market, and the current active inventory remains over 30% less than the three-year average pre-pandemic. The housing inventory still needs time to replenish before prices drop.
While the market is beginning to see a cool-off from mid-pandemic conditions, the rush to claim a market crash is hasty and ill-advised. Schoeder reminds buyers and sellers to remain realistic within the current market and not focus on the sudden appreciation that occurred during the pandemic. “Gone are the days of 20% or 30% price appreciation like we saw during pandemic. We’ll still see price appreciation, but it’ll be normal.”
Sellers are advised to adjust their expectations but remain optimistic. Houses are not going to sell as rapidly, or as high over asking price, but this doesn’t mean it’s a bad time to sell. “You’re not going to see 30 offers or $100K over ask,” Seini says.
For buyers, the market is becoming more manageable and more reasonable opportunities are arising. “[Buyers] hold the cards now. They were able to put in offers at under asking price and eventually ended up buying a home at the list price,” Seini explains as conditions improve for her clients this year compared to 2021. “They had that negotiating room to buy a house and didn’t have to give their firstborn to get it.”