After a four week pause, Orange County residential real estate once again started sliding toward a buyers market. With the number of homes for sale – aka supply - continuing its relentless upward climb, sluggish demand, and the number of distressed homes growing, this market is more and more favoring buyers over sellers. We run the numbers for the two weeks ending August 19, 2010.

First, we look at supply, or the inventory of active real estate listings. “The Orange County inventory continued to grow over the past couple of weeks, adding an additional 236 homes and now totals 11,650,” reports Steven Thomas of Altera Real Estate. “This is the highest level since December 2008. With school starting, many homeowners realize that the best time of year to sell has passed them by. As more and more sellers come to grips with the market realities, expect many of them to throw in the towel and pull their homes off the market. There are a lot of equity sellers on the market, nearly 7,900 or 68% of the active market. Many of these sellers will opt to sit out the Autumn and Holiday markets. Last year at this time there were only 8,531 homes on the market, 3,119 fewer than today.”

Not only are there a lot more homes on the market today, compared to a year ago, there is much less demand for OC real estate now. Demand – new pending sales in the last 30 days – managed a very slight increase over two weeks ago, but it is still way below last year’s level.

“Last year at this time demand was at 3,506 pending sales, 504 more than today,” said Thomas. “From here, we can expect demand to slowly drop as we enter the next season of the Orange County housing market, the Autumn market, from the start of school through the pleas of “trick or treat.” From there, housing demand will cool further as we enter the Holiday market, from Halloween through the first couple of weeks of the New Year. There are a lot of distractions during the holidays and real estate typically is placed on the back burner.”

So, supply up, demand flat – the third piece of the OC real estate puzzle is distressed properties. This element of the OC housing market just keeps on growing, which acts as a lid on prices, thus favoring buyers. The total number of distressed properties on the market – both foreclosures and short sales – has been growing steadily since last November. The most recent two weeks were no exception.

“The distressed inventory continues to grow at a very rapid pace,” said Thomas. Although OC employment has improved every month since the beginning of this year, {see our exclusive OC July employment analysis coming up in the next few days} apparently it is not enough and/or fast enough, to hold down the distressed inventory. Thomas said “Once employment improves, the pathway to an eventual healthy and stable recovery will occur. The distressed inventory increased by 182 homes in the past two weeks, the largest increase since December of 2008, and now totals 3,757 homes.”

In this 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 series is intended to provide information about general countywide trends in supply and demand.

All real estate data in this article is from a report published by Steven Thomas of Altera Real Estate.

This report appears on OC180NEWS every other Monday.