"The time has come for policy to adjust"

Today in Jackson Hole,  J Dogg spoke about the dual mandate which includes maximum employment and stable prices. During the meeting, Powell emphasized that the time has come for the Fed's monetary policy to adjust. He highlighted the need to address the challenges posed by the ongoing economic recovery and stated that the Fed is prepared to make changes to support the economy. Powell's speech at Jackson Hole signaled a potential shift in the central bank's approach to managing interest rates and inflation.

How does this impact the Orange County Housing Market? First lets look at the latest data for Orange County housing.

Orange County Real Estate Market: Inventory Peaks, But Still Below the 5-Year Average

As summer comes to a close, the Orange County real estate market is reaching its seasonal peak in terms of listing inventory. Recently there has been an increase in inventory, which is a bit misleading when comparing the past 5 years. While we typically expect an increase in homes for sale during the summer months, this year's inventory levels are well below the average over the past five years. This trend is signaling a potentially challenging market for buyers as we head into the fall and winter months.

Current Inventory Levels: A Seasonal Peak Below the Norm

In a typical year, we see a surge in listings as homeowners take advantage of the summer months to sell their properties. This year, however, the number of homes available for sale in Orange County is significantly lower than what we've seen in the recent past. Despite this being the time of year when inventory traditionally peaks, the numbers are lagging behind the five-year average.

Several factors contribute to this trend which we have discussed many times. The lingering effects of the pandemic, which disrupted the real estate market and created a ripple effect that we're still feeling today. Additionally, with interest rates having been on the rise, many homeowners who secured low mortgage rates during the pandemic are hesitant to sell, knowing that purchasing a new home would likely mean a higher interest rate and, consequently, higher monthly payments.

Declining New Listings: A Warning for the Fall and Winter

Adding to the concern is the recent decline in new listings. Over the past few months, the number of new homes hitting the market has been steadily decreasing since May this year. This decline suggests that inventory levels will continue to tighten as we move into the fall and winter months—times of the year when the market traditionally slows down.

This trend can create a more competitive environment for buyers, as fewer homes on the market mean increased competition for the available properties. Sellers, on the other hand, might find themselves in a favorable position, especially if demand continues to outpace supply.

Price Per Square Foot: A Persistent Climb

Despite the low inventory levels, or perhaps because of them, the price per square foot in Orange County continues to rise at a strong pace. This increase is a clear indication of the high demand for housing in the area, driven by Orange County's desirable location, excellent schools, and quality of life. Even with fewer homes available, buyers are willing to pay a premium to secure a property in this competitive market.

This upward trend in price per square foot is a double-edged sword. For current homeowners, it means an increase in equity and potential returns if they decide to sell. However, for buyers, especially first-time homebuyers, it can be a daunting challenge as affordability continues to be a significant concern.

Looking Ahead

As we look ahead to the remainder of the year, the Orange County real estate market is expected to face continued challenges. With inventory levels already low and new listings declining, the market could become even more competitive. Buyers may need to act quickly and be prepared to face bidding wars, while sellers could benefit from the strong demand and rising prices.

For those considering entering the market, whether buying or selling, it's essential to stay informed and work with a knowledgeable real estate professional who understands the nuances of the Orange County market. As always, being well-prepared and having a clear strategy will be key to navigating this complex and ever-changing landscape.

In summary, while the Orange County real estate market is currently experiencing its seasonal peak in inventory, it's important to note that these levels are well below the five-year average. With new listings on the decline and price per square foot continuing to rise, the fall and winter months are likely to see even tighter market conditions. Whether you're buying or selling, understanding these trends will be crucial in making informed decisions.