In this exclusive OC180NEWS biweekly report, we take a macro view of countywide market conditions for Orange County residential real estate as of January 19, 2012. All of the stats we track point to a strong early start to the home buying season in Orange County.

Demand, as measured by the number of new sales contracts during the last 30 days, jumped up from 2,220 two weeks earlier, to 2,528 as of January 19, 2012. That’s an increase of 13.9% in just two weeks. At this time In 2011, demand stood at 2,154, which was an increase of 9.9% from two weeks earlier.

The current level of demand is very similar to 2010 when on January 21, it was 2,547 units. This was an increase of 12.5% from two weeks earlier, moderately less than the 2012 increase of 13.9% for the same two week period.

Despite the solid increase in sales, inventory, or the number of homes for sale, continued to decrease in January. As of January 19, 2012, there were 8,080 homes on the market in Orange County, down from 8,114 two weeks earlier. Last year at this time there were 10,225 homes for sale in OC. At this same time in 2010, there were 7,680 units on the market.

The supply/demand relationship for OC real estate can be measured by dividing demand into inventory. The result is usually referred to as market time, but can also be expressed as the average number of homes each buyer can choose from. The more choices each buyer has, the closer the market is to a buyers market. The fewer choices, the closer to a sellers market.

As of January 19, 2012, there was an average of 3.2 homes offered for each sale. Last year at the same time, Buyers had an average of 4.75 homes to choose from. 5.0 is generally considered to be the point at which the market moves into a buyers market. Just like demand and inventory, at the beginning of 2010, with an average of 3.02 choices for each sale, the number was nearly the same as it is today at 3.20.

Thus, with demand up, supply down, and fewer choices for each buyer, there remains one key stat to complete the picture, namely, the infamous distressed properties. Since these properties represent a drag on the market, we have been watching the gentle downward trend in this stat carefully. The current numbers did not disappoint as the total dropped below 3,000 for the first time since May 27, 2010.

As of January 19, 2012, there were 2,990 distressed homes on the market in Orange County. That’s down from 3,137 two weeks earlier, and down from 4,117 one year ago.

While the current numbers are much better than last year, there certainly are more distressed homes on the market today then two years ago. At that time, there were only 2,674 distressed homes for sale in OC. But, two years ago, the trend was headed up. Today the downward trend continues -- at least for the latest two weeks.

In this exclusive OC180NEWS biweekly article series we report on the numbers for Orange County in total. Real estate is very local and any buying or selling decisions should be based on circumstances of specific neighborhoods. This article series is intended to provide information about countywide real estate trends in supply and demand.

All real estate data in this article is from a report provided by ReportsOnHousing.com. The analysis and text are by OC180NEWS.