Homes Prices in Orange County CA. are holding up Well

Published: Feb 3, 2023 0 by Vincent Bindi

Despite all of the doom and gloom… negative press published nationwide on the Web and TV, about how homes prices are going to crash… So far home prices in Orange County CA have held up very well. Before we get into the details of this statement, let me explain our analysis process. Using the Average sales price of housing in a particular region can sometimes be misleading. Reason being, in times of market changes, buyer patterns often change to reflect the changing times. And these changes of buying patterns may not be reflected accurately using the Average of past sale prices. For example, in the higher interest rate environment, many homebuyers may still remain in the market looking for a home to buy, but have decided to buy a smaller home, at a correspondingly smaller price. In this way, they can still afford to live in the home in the locations they desire (Location, Location, Location). Therefore, if you simply look at the Average price of sold homes, you will see a somewhat larger drop in so-called Home Prices, than what has actually occurred.

On the other hand, if you analyze the Median Price per Square Foot of the homes sold, and compare that to past identical statistics, you will have a much more accurate analysis of the percentage decrease or increase in home prices in a particular region. This is the statistical analysis we have been conducting since Feb of 2000 in South Orange County, CA. In our analysis, we select 9 Cities in So OC, which are not Beach cities. Plus we limit the analysis to the largest portion of sales which are homes from 1,500 SqFt to 2,700 SqFt. And we also eliminate 55+ senior communities. The purpose of the additional filters, is to get a more accurate analysis of the true measurement of the change of home prices. Finally we apply a smoothing filter to eliminate random fluctuations from month to month.

Below is the latest graph showing the Market Prices for homes and condos in South Orange County.

In the above graph, from the peak of the market… which was right around April of 2022, prices have pulled back 5.6% for single family homes, and 4.1% for Condos. In addition, if you filter out that one spike in April, the actual price drop is even less. Granted, if you bought a home or condo in April of last year, you may not be ecstatic about this report. But on the other hand, given all of the constant negative press that one reads all over the world wide Web, and on TV, the local market here in Orange County is holding up very well. And as one can see, the home prices over the past 5 months have stabilized so far.

Another interesting fact to note… the above graph shows Median Price per Square Foot home prices starting in Feb of 2000′. One can see the peak in home prices back in April of 2006’… the trough of home prices that occured in 2009 and 2010, due to the financial crisis of 2008′, and the subsequent recent peak in prices in April of 2022′ From past Peak (April 2006) to current Peak( Aprile 2022), prices have risen 50%.

There are two basic reasons why prices are holding firm to date. One reason is that the Inventory of Homes for sales are at historic lows. Homeowners don’t’ want to sell and move and buy another home at interest rates around 5.55 when they are sitting on a 30 year mortgage with a fixed interest rate in the low 3% range. Second, the job market has remained strong and has even grown stronger in certain markets in various industries.

This analysis has been brought to you by Vincent Bindi, who has been actively involved in the local real estate market here in Orange County since 2000′, and has been active in Real Estate since 1986.

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