Why is Orange County housing at an historical high in the midst of a pandemic? It's a good question. After all, unemployment is high. Many businesses are still shut down. Orange County housing prices are the highest they have ever been.
We just listed a two bedroom condo in Anaheim Hills in average condition for $525,000 and it will probably sell in days. Why? Well for one, there are only 35 properties on the market in the entirety of Anaheim Hills. And yet, 56 properties went into escrow in the last 30 days. Also, we are only one of four 2 bedroom condos on the market in Anaheim Hills.
Just like the toilet paper shortages of 2020, Orange County housing is another example of overpowering demand met with an exceptionally limited supply. As we discussed before, housing demand has been fueled by exceptionally low mortgage rates. When mortgage rates climb, monthly payments rise, affordability erodes, and the market slows. When mortgage rates fall, monthly payments drop, affordability improves, and the market heats up. For a $700,000 mortgage, the payment is $2,820 at today’s 2.65% rate, compared to $3,230 last year at 3.72%, a $410 per month savings, or $4,920 annually.
When will we be at the top of this housing peak? Certainly not until mortgage rates increase and more people decide to sell. In other words, not in 2021.