Mid-Year Real Estate Update: Insights and Projections for Q3 2024 Orange County

Mid-Year Real Estate Update: Insights and Projections for Q3 2024 Orange County

Since we have entered the third quarter of 2024, it is the right time to see what has happened in the last week of Q2 2024 so we can expect what is next in this new quarter. We will have a closer look at the following places: San Juan Capistrano, Laguna Beach, Newport Beach, San Clemente, and Dana Point in the charts.

Market Overview

As of July 1, 2024, there are 3,225 properties currently on the market in Orange County. Of those properties, 1,994 are under contract or pending. July is typically a peak month for inventory, but with higher interest rates, this peak might even increase. Fewer potential buyers due to higher interest rates could lead to an 'overflow' of inventory, meaning more supply than demand. However, if interest rates start to decline, there will be more potential buyers, and the total inventory will start to shrink. Despite the increase in inventory compared to July last year, the inventory still falls short of being considered a healthy, stable market.

Days on the Market

Another important aspect to look at is the total days on the market. If a property has been on the market for a longer period, it becomes 'less attractive' to buyers. Potential buyers might think the seller is not willing to negotiate or that there are issues with the house since the demand is not high for that particular property. Currently, the average days on the market in Orange County is 49 days, with the median days on the market being 26 days. The listing price of the property also affects the days on the market. Houses under $1,000,000 average 22 days, houses in the $1,000,000 to $2,000,000 price range average 19 days, and houses above $2,000,000 average 46 days on the market.

Median Price

The median price must be categorized into the median listing price and median closed price. Looking at the median listing price, it varies per type of housing. Single-family residences (SFR) have a listing price of $1,998,994, whereas condos and townhomes have a median of $850,000. Both show a slight increase compared to prior weeks. The median closed price for SFR is $1,400,000, while the median closed price for condos and townhomes is $865,000. The median closed price is higher for condos and townhomes, whereas the median list price for SFR is higher compared to the median closed price. Nevertheless, all other aspects show an increase compared to prior weeks, indicating a potential increase in the next quarter.

Summer Selling Season

Summer seems to be the time to market properties, negotiate offers, and complete sales before fall kicks in. One reason for the summer selling season is due to families with children. Many families prefer not to move during the school year but will do so during the summer break, avoiding mid-school year stress and allowing more time for school switches and neighborhood adjustments. Another reason for the summer selling season is more daylight. People generally feel better during summer, with rising temperatures and longer days making homes more appealing to prospective buyers. Since it typically takes about 30-45 days for a buying process to go from offer to closing, buyers who secure a home by mid-July should be able to move before the new school year starts. With two more months of summer, July and August, more sales are expected in Q3.

Conclusion

Quarter 3 promises an increase in sales before fall, thanks to the summer selling season. With a potential drop in interest rates in the near future, more buyers may enter the market, increasing demand for the current supply. However, it is important to note the trend of Californians moving to other states. In last week's blog, we discussed various reasons why Californians decide to reside in other states, indicating that not all local sellers will stay local buyers.

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