Menu

OC HOUSING REPORT: A 2025 Forecast

HAPPY NEW YEAR!!! NOW, WHAT DOES THAT MEAN FOR ORANGE COUNTY REAL ESTATE?

FIRST, LET US LOOK BACK AT WHAT HAPPENED IN 2024 IN TERMS OF INVENTORY, DEMAND, LUXURY PROPERTIES, AND THE EXPECTED MARKET TIME.

ACTIVE INVENTORY

The inventory climbed all year until its late peak in September.

The year started with an active inventory of 1,623 homes, the second lowest level to start a year since tracking began in 2004, only behind 2022’s 954 anemic start. The average start before the pandemic was 4,500 homes, an astonishing 177% higher. A lack of available homes to purchase has been the mantra for the housing market since the pandemic hit nearly five years ago. Unlike in 2023, when the inventory fell from January through mid-April, this year was different, more like 2022, when mortgage rates were climbing. From January until its peak in September of 3,695, the inventory grew by 128%, adding 2,072 homes. It was the highest peak since 2022. The 3-year average peak before COVID (2017 to 2019) was 6,959 homes, 88% higher than this year. From September until the year’s end, the number of available homes decreased to 2,699, similar to 2022’s 2,642 level. The end to 2024 was 40% below the 3-year average end to December of 4,479. The start of 2025 will be very similar to the start of 2023, with about 2,500 available homes to purchase.

In 2022, due to skyrocketing mortgage rates, homeowners opted to stay put and “hunker down,” enjoying their fixed, low monthly mortgage payments. There were 22% fewer homes placed on the market in 2022 compared to the 3-year pre-pandemic average, 8,450 less. This trend grew significantly as 2022 progressed, and rates eclipsed 7% in October and November 2022. In 2023, the trend continued where 2022 left off, and homeowners hunkered down all year with 41% fewer homes placed on the market, 16,023 less. A notable 81% of California homeowners with a loan enjoy a fixed rate at or below 5% (Q3-2024). 65% are at or below 4%, and 29% have a rate at or below 3%. Yet, homeowners are tired of waiting for rates to fall so they can sell and find a new home. It has been 28 months since rates were below 6%, August 2022. In 2024, through November, there have been 3,497 additional FOR-SALE signs compared to the lows of 2023, 16% more. There are 32% fewer signs than the 3-year average, or 12,055 less.

Mortgage rates were stuck above 7% for most of 2024. If rates remained below 7% all year, demand would have increased, and the inventory would have had a harder time climbing. Instead, the additional homes placed on the market this year compared to 2023 accumulated over time and built this year’s much higher inventory. Nonetheless, the active inventory remains below pre-COVID levels.


CONTACT KASIA FOR MORE INFO


Kasia Andrzejuk
(630) 569-5299
kasia@kasia99realtor.com
DRE 02124221