Orange County Real Estate Is at a Fork in the Road
The Orange County housing market has officially hit a turning point—and we’re only halfway through the year. Inventory has doubled since January, buyer demand is treading water, and mortgage rates are holding all the power. Think of it like standing at a fork in the road: one direction leads to a slower, cooler market. The other? A surprise rebound if rates shift.
In this midyear housing report, we’re breaking down the data, the trends, and what could define the rest of 2025—so whether you’re buying, selling, or just staying informed, here’s what matters most right now.
Rates Are the Deciding Factor
So far, 2025 has delivered a classic standoff. Mortgage rates have hovered between 6.6% and 6.99%, keeping many sellers on the sidelines and making affordability a challenge for buyers. Without a decisive break below 6.5%, don’t expect a sudden market turnaround.
Buyer Demand Is Flat and Fragile
Buyer demand remains historically low, with just 1,565 pending sales across Orange County—down 4% from last year and nearly identical to 2023 levels. Activity slowed another 3% over the past two weeks, likely tied to 4th of July travel and continued rate sensitivity.
Unless mortgage rates drop below 6.5%, expect buyer demand to remain stagnant through the rest of the year, with only minor seasonal upticks.
Inventory Has Surged
Active inventory has more than doubled, rising from 2,401 listings in January to 4,817 today. That’s:
-
58% more than July 2024
-
112% more than July 2023
While we’re still 28% below the pre-COVID July average of 6,708 listings, this growth signals that more sellers are reentering the market—even as buyer demand struggles to keep pace.
Homes Are Taking Longer to Sell
The Expected Market Time (EMT)—how long it would take to sell all current listings at the current pace—is now 92 days, up from 61 days in February and the slowest July pace since 2019.
Breakdown by property type:
-
Condos/townhomes: 85 days
-
Detached homes: 97 days
For comparison, the EMT at this time last year was just 56 days. That means more negotiation room for buyers—and a longer road to closing for sellers.
Prices Are Adjusting, Not Crashing
According to Zillow’s Home Value Index:
-
Home values are up 4.6% year-over-year
-
Down 0.4% month-over-month
Most sellers still have low mortgage rates and strong equity. That’s keeping prices steady despite slower demand. Don’t expect big drops—just slight month-over-month drift through the rest of 2025.
Two Possible Paths Ahead
Scenario 1: Mortgage Rates Stay High (6.5%–7%)
-
Buyer demand stays flat
-
Inventory continues to climb into the fall
-
EMT rises above 100 days
-
Prices soften gradually
Scenario 2: Mortgage Rates Fall Below 6.5%
-
The Fed signals future rate cuts
-
Buyer demand jumps (like it did in Fall 2024)
-
Inventory peaks sooner
-
EMT shortens
-
Prices stabilize or rise heading into 2026
The direction of interest rates will shape the next 6 months.
The Luxury Market Is Slowing Sharply
Homes over $2.5M are seeing longer market times and reduced demand.
-
Luxury inventory: 1,235 homes
-
Luxury pending sales: 160 (down 7%)
-
Luxury EMT: 232 days (the slowest pace all year)
Breakdown by price:
-
$2.5M–$4M: 167 days
-
$4M–$6M: 318 days
-
$6M+: 410 days (you’re looking at August 2026 closings)
Sellers in this segment need to be highly strategic on both price and presentation.
Key Takeaways for Buyers and Sellers
Buyers
-
There’s more choice and less competition than we’ve seen in years
-
Use this moment to negotiate and move strategically
-
If rates drop, expect demand—and competition—to come roaring back
Sellers
-
Pricing it right from the start is crucial
-
37% of homes have already had at least one price cut
-
Homes that show well and are fairly priced are still moving
Everyone
This isn’t a crash—it’s a transition. Mortgage rates are calling the shots. If you’re thinking of making a move in Orange County, don’t rely on headlines—get a plan that fits your goals.
Final Thought
Orange County real estate is at a fork in the road. Whether you’re buying, selling, or just staying informed, the second half of 2025 will be defined by one thing: interest rates. Stay ready, stay informed—and reach out if you want a strategy built on facts, not fear.
