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Homeowners in Orange County have benefited significantly from a rise in values, pushing affordability considerably lower… there are just fewer and fewer choices below $500,000.
It has been nearly 5 years since the housing market reversed course and started its relentless climb from the depths of the Great Recession. When the Orange County housing market ignited at the beginning of 2012, the median sales price was at $400,000 and foreclosures and short sales accounted for 25% of the entire active inventory and 49% of all pending sales. Homes were flying off the market and housing was on the mend.
Investors were first to the party, snatching up anything and everything they could get their hands on. It didn’t take long for regular buyers to jump into the mix. With low prices and low interest rates, it made sense to purchase. In many cases, it was actually cheaper to own than to rent. As a result, home values appreciated rapidly in 2012 and 2013. The appreciation continued in 2014 and 2015, just not at the same rapid clip as the prior two years. 2016 has been more of the same, slow, methodical appreciation.
This year, the median sales price reached record levels, eclipsing heights reached in 2007. The median in August was at $649,000, that’s up 62% since the start of 2012. The tremendous appreciation translates to fewer properties for sale within the affordable price range of less than $500,000. More and more homes and condominiums have appreciated past the $500,000 mark.
In April of 2012, the inventory of homes was nearly identical to today’s inventory. Yet, back then, there were 1,807 condominiums on the market. Today, there are 1,003; that’s 44% fewer. Believe it or not, there were 1,076 detached homes on the active listing market back then. Unbelievably, there are only 194 available today. That is a drop of 82%. Yes, there was a day when a buyer had plenty to choose from below $500,000, but that’s just not the case anymore.
Detached homes below $500,000 almost do not exist. In the past year alone, the numbers have dropped an additional 33%. Even with a slower, more methodical appreciation, more homes are climbing above the half-million-dollar threshold. And, soon, there will be fewer than a thousand condominiums available within this affordable price range.
As a matter of fact, there used to be plenty of condominiums priced below $250,000. In April 2012, there were 938, compared to 145 today. That’s a jaw-dropping 85% decline.
With home values slated to continue to slowly appreciate, it won’t be long before there will no longer be a detached home priced below $500,000, or a condominium below $250,000. The astonishing rebound in housing has almost completed its 5th year; as a result, there are fewer affordable choices.