There is no doubt that the Orange County real estate market is on a high roll this year. The exponential growth was something that no one expects, especially with the myriad of issues that presented themselves last year.
The market has seen some changes from the median price to the housing supply, and the first quarter of 2021 provides enough evidence that the market will keep on thriving.
However, before you begin to wonder how this happened, there are important factors that played a major role. What are they, you may ask? It’s quite simple.
Here are three key housing statistics that affect the real estate market in Orange County and an analysis of how those stats have changed in Q1 of 2021.
Median Sold Price
Based on the statistics that we have, the median sold price during the first quarter of 2021 was $660,000. If we compare it with Q1 and Q4 of 2020, there is a visible price increase. For the first and fourth quarter of 2020, each median sold price was $545,000 and $659,000. That means homes have appreciated by a whopping $115,000 (17.5%) in just one year!
Also, things are the same when it comes to the median list price. For Q1 of 2021, it was $698,000. But for Q1 of 2020, the median price was $590,000. This is a price increase of $108,000 (15.5%), which is crazy.
According to LA Times, if the economy continues to improve, then prices will keep on rising and the pandemic home-buying trend will extend until the end of 2021.
Number of Homes Sold
During the first quarter of 2021, there were 11,211 units sold in Orange County. In the first quarter of 2020, a total of 9,986 units were sold, an increase of 1,225 units (11%).
However, this amount pales in comparison with Q4 of 2020, at 12,965 units sold. The difference of 1,754 units (13.5%) is clearly understandable, as Q4 2020 had more homes available than Q1 2021. And with the limited housing supply in Orange County, the market cannot keep up with the high demand from homebuyers.
What’s more, new constructions may not be able to keep up with the demand as well. That’s because of the roaring costs for lumber and construction labor. According to Fortune, the demand for home lumber has caused a huge spike in price, reaching up to $24,000 in sales.
Median Days on Market
For CDOM (Cumulative Days on the Market), this refers to the time duration that a house was on the market. It starts from the first day (when it is posted under new listings) down to the last day (when it is purchased by a new client).
The CDOM for the first quarter of 2021 was 10 days, while the CDOM for the first quarter of 2020 was 22 days. This is a 55% drop when we compare the data, but it also makes sense. With multiple offers from homebuyers and some of them offering to pay in cash, these homes are off the market fast.
Advantages and Disadvantages of These Housing Factors
These key housing factors present a lot of opportunities—as well as obstacles—for buyers, sellers, and investors.
First, let’s talk about the opportunities in the market right now. For homeowners who are planning to sell their home, now is a great time to do it. The median list and sold prices will continue to soar high in 2021, and it will not stop anytime soon. Add to it the bidding wars and low inventory,and prices will go higher than last year.
According to a related article, 60% of California citizens feel that this year is a good time to sell a house.
For real estate investors, this is also a good time to invest as well. There’s a lot of hidden potential in the real estate market now if you know what to look for.
For buyers, they can take advantage of the low mortgage and borrowing rates to purchase their own home in Orange County.
However, there are some obstacles that need to be addressed. The lack of housing inventory has been an issue since last year. According to Spectrum News, the number of homes available in Orange County at the end of the year was “unprecedented” and quite small to start the year.
Since there is limited availability of homes in Orange County, in comparison to other areas in California, median prices are projected to go higher. Which is also not favorable for homebuyers who are on a budget.
For some homeowners, they are having some second thoughts about selling their houses. Being aware of how tough the market is, some would postpone their plans of moving to a new location and keep their house for the meantime.
When we take a look back at the events from last year and how it affected most people, it is safe to assume that it brought a positive impact to the Orange County real estate market.
There is a sense of urgency and want from homebuyers to have their own home, which resulted in record highs in terms of median price and CDOM. With a high demand for new homes, it will be up to the real estate agencies and builders to sustain the market’s supply and demand.
All of the data in this article was gathered from multiple sources and may change over time. It is only used to present and inform about the current real estate market update in Orange County as of April 2021.