Despite widespread fears of a housing market crash, recent data from the December 2024 Orange County Housing Report by Steven Thomas, creator of Reports on Housing, shows that a significant drop in home values is not on the horizon. A LendingTree survey found that 44% of Americans, including a surprising 52% of millennials, believed the market would crash in 2024. However, just as in 2023, these predictions have not materialized. The persistent misunderstanding stems from memories of the Great Recession, a period that left many homeowners financially devastated. Yet, the current housing market is fundamentally different, thanks to key structural factors.
One of the primary reasons housing values have remained stable is the historically low inventory. As of December 2024, there are only 3,044 homes available in Orange County, a stark contrast to the inventory levels preceding the Great Recession. For example, in 2006 and 2007, inventories peaked at 16,006 and 17,898 homes, respectively. Even with 40% more homes on the market this year compared to last year, supply remains far below pre-pandemic averages. This limited inventory, coupled with over a decade of strict lending standards, has created a robust foundation for the housing market, preventing any dramatic price drops.
For residents and prospective buyers in Costa Mesa, CA, the housing market trends reflect the broader stability seen throughout Orange County. Costa Mesa’s desirable location, vibrant community, and proximity to employment hubs contribute to its sustained demand, even as inventory remains limited. This makes Costa Mesa an attractive destination for both families and young professionals seeking a balanced lifestyle.
Another critical factor is the health of today’s homeowners. Unlike the period leading up to the Great Recession, buyers in recent years have been highly qualified, boasting strong credit, steady jobs, and manageable fixed-rate mortgages. Furthermore, record levels of tappable equity and a significant percentage of homeowners owning their properties outright add to market stability. According to Freddie Mac’s House Price Index, home values in the Los Angeles/Orange County metro area have risen 6% year-over-year through October 2024, underscoring the resilience of the market even amidst high mortgage rates.
The balance between low supply and tempered demand is reflected in the current Expected Market Time of 70 days, which remains far lower than the 200+ days recorded during the Great Recession. While high mortgage rates have constrained buyer activity, the decrease in available inventory has maintained upward pressure on prices. As we head into the holiday season, the inventory is expected to dip even further, continuing the pattern of seasonal tightening. This trend can also be observed in Costa Mesa, where low inventory and high demand ensure that home values remain strong.
In summary, the Orange County housing market—characterized by low inventory, strong homeowner equity, and responsible lending practices—is far removed from the conditions that led to past crashes. As Steven Thomas highlights, fears of a market collapse are unfounded, with current data pointing to ongoing stability rather than dramatic declines in home values. Costa Mesa, CA, exemplifies these dynamics, offering a resilient housing market that continues to attract buyers and investors alike. For prospective buyers and sellers in Costa Mesa and surrounding areas, understanding these trends is key to making informed real estate decisions.
