Is the Orange County Housing Market Crashing? Here Are 3 Key Signs to Watch

Veronica and Rosario have very different ideas of what “simple” means when it comes to recipes. For Veronica, “simple” can involve hours of prep—as long as she can watch her favorite shows while doing it. Rosario? He’s a three-ingredients-or-less kind of guy. No, really, his brain shuts down after three.

The recipe for an Orange County housing market crash or bubble works the same way. Sure, you can factor in jobs, inflation, affordability, mortgage rates, and days on market—but unless you’re an economist, your brain might glaze over. The simpler “recipe” for a falling market?

• Very low housing demand 
• Very high housing supply 
• A high number of distressed homes for sale

Let’s see where the Orange County real estate market stands in July 2025.

1. How Low Is Housing Demand in Orange County Right Now?

(OC real estate demand trends, July 2025)

Demand has been weak in 2025, similar to the sluggish levels of 2023 and 2024. With mortgage interest rates still high, most buyers in today’s market are moving because of life events—like job relocations—rather than choice.

In the past, low supply helped mask this weak demand, allowing homes to sell quickly. But as supply shifts, that balance is changing.

Bottom line: Low buyer demand in Orange County has been signaling that a slower market could be ahead.

2. How High Is Orange County Housing Inventory?

(OC housing inventory levels, July 2025)

Compared to July 2024, Orange County housing inventory is up more than 40%. That’s a big jump—but still well below the 2019 “normal” market levels. Inventory would need to climb another 40% just to match that, and to hit Great Recession levels, it would have to keep rising at this pace for years.

Bottom line: Today’s inventory levels are growing, but they’re still far from the point where they’d cause a housing bubble or market crash.

3. Where Are All the Distressed Listings?

(Orange County foreclosures and short sales, July 2025)

During the housing bust of the Great Recession, distressed listings (foreclosures and short sales) skyrocketed—jumping from a few hundred in May 2007 to almost 6,000 by May 2008. That was more than one-third of all listings.

Today? There are just 7 distressed listings in all of Orange County. Most local homeowners have significant equity, meaning they’re not being forced to sell under distress.

Bottom line: With so few distressed properties, there’s no sign of an Orange County housing crash on the horizon.

Final Thoughts: Real Estate Is Hyperlocal

The Orange County real estate market isn’t crashing—and the data shows we’re far from it. But real estate trends can vary drastically from city to city and even neighborhood to neighborhood.

If you’re thinking about buying or selling in 2025, a customized market analysis will give you the clearest picture of your opportunities.

📞 Contact The Veronica Encinas Team today to get a personalized breakdown of your local market and expert guidance for your next move.