The median single-family home value surged in 2013 in Orange County roughly 25 percent, starting off the year at less than $1.8 million and finishing around $2.4 million. These booming prices put those underwater on their mortgages in a good position to potentially sell their homes, which will likely fare well in Beverly Hills where inventory is low.
When prices are rising at a high rate, it can sometimes be challenging to determine whether that means that market is improving or prices are going to climb so high due to demand that it’s going to end up in a stand still. While some economists are wary about the drastic price jump seen last year, national trends in the luxury market and stabilizing market conditions may prove otherwise.
Although the median single-family home price in Newport Beach rose over the past year, the market is currently in an even position that is perfectly balanced between sellers and buyers. Altos Research’s Market Action Index, which measures market conditions to determine whether it favors home buyers or sellers with 30 as the neutral value, was recorded as 30.36 as of January 24.
Despite the fact that the inventory is tightening and prices are rising, buyers and sellers have roughly the same amount of pull in the market. This means that the high-stakes bidding wars taking place in other areas of the country aren’t really happening here. At the same rate, sellers don’t have so much control over the market that they can overvalue their homes.
So what can be causing these data? One reason could be the number of high-end, luxury homes that are being sold. This would drive up the median home price. Similarly, fewer people are underwater on their mortgages thus leaving fewer distressed properties on the market to drag the median value downward.
In late 2013, Newport Beach was ranked as the second most expensive real estate market in the country, which also explains the upward moving price tags.
Looking to the Past
“Between 1991 and 1999, the Federal Housing Finance Agency reports that home prices in the Anaheim-Santa Ana-Irvine metropolitan statistical area increased 11 percent (unadjusted for inflation). During the same period, renters in the same area saw their housing costs grow 12 percent, according to the Bureau of Labor Statistics. Translation: the price of homes was not inflated during the 1990s in Orange County – and in fact might have been undervalued a bit,” according to a report by the Orange County Register.
The cost of renting in an area can sometimes be a predictor of the health of the real estate market, which is why some experts are concerned that the inflation of prices currently in Orange County are too high compared to current rental rates.
It’s difficult to judge the sustainability of the market while it is still recovering, and 2014 will likely give a lot of insight on whether movement is going in the right direction.
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Consider These Orange County Luxury Homes Priced Between $2,000,000 to $4,000,000
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(all data current as of 10/22/2017)
Listing information deemed reliable but not guaranteed. Read full disclaimer.