The 3 Signs of a Market Crash—Only One is Here
A true housing market crash requires three signals to align:
-
Oversupply
-
Distressed sales
-
Weak buyer demand
Right now, only one of those is present: buyer demand is soft. This has been the case since interest rates rose above 6% back in 2022.
Current demand sits at 1,604 pending sales, which is:
-
Up 5% from last year
-
But 64% below the pre-COVID average
Here’s what we don’t have:
-
Oversupply? Not even close. Inventory sits at 5,071 homes, which is up 48% from last year but still 67% below the 2006–2007 levels that preceded the last crash.
-
Distressed sales? Almost nonexistent. In June, just 2 of 1,828 closed sales were foreclosures or short sales—that’s just 0.11%, compared to over 33% during the 2008 crash.
The takeaway? This is a slowdown, not a breakdown.
Inventory Might Be Peaking, But Not Crashing
Orange County inventory rose by just 21 homes in the past two weeks, signaling a potential seasonal peak. We’re not seeing panic listings or price collapses.
Instead, sellers are patient. Many have low mortgage rates and no urgency to sell. Those who don’t get their desired price are choosing to wait rather than cut deals.
While prices have dipped slightly month over month, that’s typical for summer months when inventory is higher and buyer urgency is lower. It’s not a sign of collapse—it’s a normal market rhythm.
Buyer Demand Is Still Muted—But Watch Rates Closely
Buyer activity rose just 1% in the past two weeks. It’s still well below normal, but things could shift quickly.
Mortgage rates are the wild card.
Rates just dipped from 6.75% to 6.57%—the lowest since October 2024—following a weak jobs report. If rates fall below 6.5% and stay there, demand could rebound fast.
This week’s inflation reports (CPI, PPI, and Retail Sales) could drive big rate moves. If rates dip, we may see a buyer surge—especially from those who’ve been waiting on the sidelines.
Expected Market Time: Still Sluggish, But Stable
The Expected Market Time (EMT) dropped slightly from 96 to 95 days, thanks to minimal changes in supply and demand.
Compare that to:
-
67 days at this time last year
-
78-day pre-COVID average
-
And 98 days for detached homes currently
It’s a slower market overall—but not frozen. Buyers have more breathing room, but they’re still not calling all the shots.
The Luxury Market Is Warming Up
While the rest of the market remains sluggish, luxury is heating up.
-
Luxury inventory dropped 3% to 1,201 homes
-
Luxury demand rose 3% to 171 pending sales
-
Expected Market Time improved to 211 days—its best reading since early June
Breakdown by price range:
-
$2.5M–$4M: 168 days
-
$4M–$6M: 240 days
-
$6M+: 318 days
Strong performance in the stock market and fewer new listings are keeping this segment more competitive.
Key Takeaways for Buyers and Sellers
For Sellers
-
Pricing is everything. With more competition and longer timelines, homes that are overpriced are sitting.
-
This is not a distressed market—price fairly and you’ll still get solid activity.
-
Be prepared for a longer selling process unless your home is move-in ready and competitively priced.
For Buyers
-
Don’t expect a crash.
-
Inventory is higher and prices are softening slightly—but deep discounts are rare.
-
Focus on well-priced homes and stay alert for rate drops that could bring more competition back.
Bottom Line
The housing market isn’t on the verge of collapse—it’s adjusting.
Only one crash signal is present: weak demand. Inventory is still tight, and distressed sales are almost zero. Until those other two signals emerge, prices are unlikely to plunge.
If you’re thinking about making a move in Orange County, the key is timing, strategy, and understanding the data. Let’s talk about how that applies to your situation.
