Orange County, California Housing Market Update | February 2025
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The Orange County housing market kicked off 2025 with some major shifts, and the latest data is telling an interesting story. January saw the largest inventory jump since 2010, while deand recorded the second smallest increase since 2004. However, as we move into February, the market is shifting again. Let’s break down what’s happening now and what it means for buyers and sellers in the months ahead.
Winter Market Trends: Inventory and Demand
The February data is in, and the past two weeks of January showed clear signs of market movement. As the winter market begins to thaw, we’re seeing two major trends: supply is increasing slightly, and demand is surging. Historically, demand tends to rise at the start of the year, and this year is no exception. However, the pace of demand growth is notable.
📊 Year-over-year demand increase: Pre-pandemic (2017-2019), demand typically increased by 47% in early Q1. In 2023, demand surged 67% at the start of the year. In 2024, demand rose 52% in the same period. In 2025, demand has jumped 36% in just two weeks, climbing from 988 to 1,340 pending sales. This increase in pending sales is helping to reduce market times, meaning homes are selling faster than they were just weeks ago. Demand is expected to continue climbing through February and March, peaking in spring, much like it did in 2023 and 2024.
Mortgage Rates and Affordability Remain Key Factors
While demand is rising, affordability is still a major challenge for many buyers. Mortgage rates remain above 7%, which has been a psychological barrier for homebuyers.
🏦 Current mortgage rates (as of February 5th, 2025): 30-year conforming fixed rate: 6.99% | 30-year jumbo fixed rate: 7.33% (Source: Mortgage News Daily). Higher rates are keeping some buyers on the sidelines. However, the Federal Reserve has signaled that monthly economic reports will be critical in determining the future of rate cuts. The only path to lower mortgage rates right now is clear signs of an economic slowdown.
One of the biggest economic indicators is jobs data, which includes: number of job openings, wage growth, and the number of jobs created or lost. These factors will heavily influence mortgage rate movements in the coming months. If the economy starts to slow, expect rates to trend downward, potentially improving affordability for buyers.
Active Inventory: A Gradual Increase
Meanwhile, active inventory has increased slightly, reflecting the typical seasonal trend. Inventory rose by 62 homes (+2%), reaching 2,821—the highest level since early December. Before the pandemic, inventory typically grew 11% early in the year. In 2023, inventory actually fell 15% in early Q1, while last year saw a modest 10% rise. This year’s 2% inventory increase suggests a slow but steady rise in available homes. Historically, supply continues to increase through March before picking up speed in spring, as more sellers enter the market.
🛑 Biggest inventory constraints: Many homeowners are still reluctant to sell due to their low locked-in mortgage rates. New listings remain below historical norms, even as seller activity increases.
📊 Year-over-year inventory comparison: February 2025: 2,821 active listings | February 2024: 1,942 active listings (31% lower) | Pre-COVID average (2017-2019): 4,843 active listings (72% higher than today).
In January 2025, 2,527 new sellers entered the Orange County market—17% below the pre-COVID average, but 19% higher than last year’s 2,054. While seller activity is improving, it remains below pre-pandemic levels.
Expected Market Time: Homes Selling Faster
The Expected Market Time, which reflects how long it takes to sell a home, has dropped significantly.
📉 Year-over-year market time shifts: Pre-pandemic (2017-2019), Expected Market Time dropped 23 days in early Q1. In 2023, Market Time fell 39 days at the start of the year. In 2025, in just the past two weeks, the Expected Market Time plummeted from 84 to 63 days.
This rapid drop suggests that homes are selling much faster than they were in December. As demand continues rising through March, we expect market times to decrease further, hitting their lowest point between March and April.
🏡 What’s selling quickly? Well-priced, turn-key homes in desirable areas are getting multiple offers. Overpriced or outdated homes are sitting on the market longer.
Luxury Market: A Strong Start to 2025
Orange County’s luxury housing market is seeing significant movement. Traditionally, the luxury segment was defined as the top 10% of sales, but since COVID, high-end sales have surged, and values have continued to climb.
🚨 As of 2025, the luxury threshold has officially shifted from $2 million to $2.5 million.
📊 Luxury market trends over the past two weeks: Luxury inventory ($2.5M+ homes) increased by 12%, rising from 737 to 829 homes. Luxury demand surged, with pending sales jumping 44% to 140. Expected Market Time for luxury properties dropped significantly, meaning homes are selling faster.
⏳ Breakdown by price segment: $2.5M - $4M homes: Market Time fell from 149 to 132 days. $4M - $6M homes: Market Time dropped from 272 to 183 days. $6M+ homes: Market Time fell sharply from 595 to 333 days. These numbers indicate that luxury buyers are returning to the market, though ultra-luxury homes ($6M+) may still take until early 2026 to sell.
What This Means for Buyers and Sellers
📢 For Sellers: If your home is priced right and in great condition, it will likely sell quickly. Overpriced homes will continue to sit on the market unless sellers adjust expectations. The luxury market is moving faster, but competition remains strong for high-end listings.
📢 For Buyers: More inventory is hitting the market, providing more choices. Mortgage rates remain a key factor, and rate drops could drive even more competition. For high-end buyers, the current market presents a strong negotiation opportunity as inventory builds.
Final Thoughts
The Orange County housing market is gaining momentum as inventory rises and demand surges. Supply is up slightly, but demand is growing much faster, pushing market times down. Key factors to watch: 📉 Mortgage rates – Will they dip below 7%? 🏡 Spring inventory surge – More sellers will list in March and April. 💰 Affordability pressures – Will incomes and financing options support rising home prices?
🔥 Stay informed! If you’re thinking about buying or selling, now is the time to start preparing. Follow our updates for expert insights on the Orange County housing market!
