Orange County homes are appreciating the slowest in Southern California. According to a new report from JLL, Orange County home prices increase 2.1% last year, compared to of 3.3%, 2.4% for San Diego, 4.1% for Riverside and 4.5% for San Bernardino.
"Orange County home appreciation is the lowest in the SoCal region. Moreover, the gains are among the lowest since the housing recovery in 2012," Paulina Torres, research analyst at JLL, tells GlobeSt.com. "The main reason for this is simple, Orange County is already an expensive market, and prices are nearing their plateau. It is still a seller's market in Orange County but these sellers actually want to sell in a constricted timeframe and as many millennials enter the housing market and with low mortgages and a strong economy, homeownership rates in the entire state are at a nine-year high."
While home appreciation is the lowest in the region, Orange County is also the most expensive home market, with average home values of $682,052. "Orange County is the most expensive in the SoCal region and it is 23% higher than the state median home value and 191 percent higher than the national home value," explains Torres. "On the other side, Orange County median household income is also the highest in the SoCal region, 19% higher than the state median income level and 46 percent higher than the national value. These ingredients create a cocktail of homeownership where current values are just barely affordable and if they were significantly higher, buyers are not hesitating to look elsewhere."
This year, Torres expects home values to continue to rise—especially in light of decreased mortgage rates—but at a slower pace. Millennials are behind the trend. "There are two opposing trends that will greatly impact the market in the coming years. First, millennials are increasingly shifting over from renting to becoming homeowners and personal income in the county is growing faster than home prices, increasing the demand for homes in the market," says Torres. "On the other hand, millennials are safe home buyers and because Orange County is already an expensive market to be a house hunter, price appreciation is limited as many homebuyers continue to look towards more affordable markets like the Inland Empire to purchase. On a national level, slow growth in the economy coupled with persistent inflation expected in the coming years will limit home price appreciation nation-wide."
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Kelsi Maree Borland
