We are more than halfway through 2017, which means a lot of home buyers in Orange County, California are already looking ahead to 2018. And it begs the question: What will the real estate market be like in 2018? Which way are home prices moving? Will it be a buyers’ or sellers’ market?
Here’s a look at current trends in the area, along with an Orange County housing market forecast through the summer of 2018.
Home Prices Still Rising
According to MLS data and other sources, the median sales price for homes in the county rose above $675,000 in May 2017. Zillow clocked it at $682,800 in June, which was 4.4% higher than the same month last year.
But a recent forecast for the Orange County, California real estate market – extending through summer of 2018 – suggests that home prices might rise more slowly in the months ahead.
Orange County, CA Housing Forecast: 2017 – 2018
The real estate research team at Zillow recently predicted that home prices in Orange County would only rise by around 1% over the next 12 months.
This forecast was published on June 2017, which means it extends into the summer of 2018. And it represents a significant reduction from the 4% to 5% appreciation that occurred over the last 12 months.
Here are the company’s home-price forecasts for the three largest cities in Orange County:
- Anaheim: The housing analysts at Zillow expect home prices in Anaheim, California to rise by 1.4% over the next 12 months (as of July 1, 2017). House values in Anaheim rose by 6.5% over the previous 12 months.
- Irvine: The company issued an even more modest forecast for the Irvine housing market, with an expectation for a 0.8% price increase over the next year.
- Santa Ana: Economists predicted that home values in Santa Anna would rise by 2.1% between now and the summer of 2018. That was one of the highest forecasts they issued for cities within the broader Orange County real estate market. Santa Ana also had the highest increase in home prices over the last year, with values rising by 11% according to the company’s data.
The more moderate forecast for the Orange County housing market reflects those issued for many cities across the country. The general consensus appears to be that home prices nationwide are cooling down, even in the red-hot real estate markets where they rose by double digits over the last year.
In places like Orange County, houses are becoming unaffordable to an ever-growing segment of the population. This reduces demand and take some of the steam out of home-price appreciation. Perhaps that is why we are seeing more modest predictions and forecasts for the Orange County real estate market in 2018.
Is There a Price Bubble?
The Orange County real estate market is still constrained with limited supply available. According to local housing professionals, the county had about a 2-month supply of homes in May of this year. A “balanced” real estate market is considered to have about six months worth of supply. So from an inventory standpoint, Orange County is still a seller’s market due to limited supply.
But homes aren’t selling as quickly as you might imagine, given the limited inventory. In May, the median number of days on market for listed properties was 40. That means houses in the area are selling a bit faster than the national average, but they’re not going like “hotcakes.” This reinforces the idea that the local housing market is becoming unaffordable to the majority of buyers.
Which brings us to the million-dollar question. Is the Orange County real estate market in a bubble, or will it enter one in 2018?
Jim Doti, an economics professor at Chapman University recently told the Orange County Register that home prices in the area have reached an “irrational level.” This is because the median value is now eight times higher than the median family income. Doti went on to say: “We are in a balloon. No question.”
Disclaimer: This article includes predictions and forecasts for the Orange County housing market in 2017 through 2008. These projections were provided by third parties not associated with our company. As a rule, HBI does not make claims or assertions regarding future economic conditions.