More, more, more! How do you like it?

Yes, I’m showing my age. Kudos to those of you who caught the throwback reference. January was a month of “more” – more listings, more sales, higher prices, and, unfortunately, persistently high interest rates. Oh, and plenty of fires.

The Wildfire Aftermath: A Slow-Burn Recovery

January turned into a nightmare for tens of thousands of residents displaced by raging fires in Los Angeles County. Entire communities are now contaminated with toxic fire-related pollutants, requiring extensive rebuilding and environmental remediation. This Herculean effort will take years and, by my estimation, costs will total around $100 billion when all is said and done.

In the midst of this crisis, President Trump wasted no time reactivating ICE deportations, with California among the first targets. Simultaneously, he hinted at deploying the National Guard for support. While California remains a self-declared sanctuary state, the debate over federal aid for fire recovery rages on. At first, aid was threatened, then dangled with conditions attached. Let’s see what happens.

Political observations aside, deporting cheap laborers while reducing financial aid isn’t exactly a recipe for swift recovery. The bottom line? The road ahead is long and bumpy for displaced homeowners hoping for a quick fix.

A Silver Lining: Short-Term Housing Boom

If there’s any upside, it’s in hospitality. With an off-season influx of displaced Angelenos, LA-adjacent hotels and short-term rentals saw a welcome boost, sidestepping the usual post-holiday lull. Even OC’s long-term lease market benefited, with 1,260 leases recorded in January—the highest since 2019—at a median rate of $4,500, tying last June’s peak lease rate.

The OC Housing Market: Still Standing Strong

Despite doomsayers prophesying an OC real estate apocalypse, the numbers tell a different story. This January saw 50 more listings and 74 more closed sales than the same time last year. And no, it wasn’t due to lower interest rates—they stayed put.

In fact, rates barely budged throughout 2024, yet home sales and prices outperformed expectations due to limited supply and fierce demand. Annual sales were up by 1,200 homes, and the median price climbed 12.2% year-over-year. January kept pace, with a 3.1% increase in median price from December.

For context, a slight price bump in January isn’t unusual. A 1-2% increase post-holiday is common. This year’s slightly larger gain is more about December underperforming than January overachieving. Expect the media to spin it differently, though—brace yourself for misleading headlines about a “January price surge.”

What Now? My Crystal Ball Says…

With 50,000 acres and over 16,000 structures suddenly gone in LA County, the real estate ripples will be felt for years. Many affected properties were underinsured or uninsured altogether, adding another layer of complexity. And while California is no stranger to wildfires, January infernos at this scale? That’s new territory. This recovery effort will be another first, from which to learn.

Before the fires, analysts were already predicting affordability concerns, insurance hikes, and high interest rates to dampen sales. Thus far, they’ve been proven wrong—demand remains strong, and prices are holding.

Interest Rates and the Pricing Puzzle

Context is everything. Normally, OC home prices peak between June and August, then gradually taper down through December. But in 2024, interest rates began to drop in July, well after home prices had already hit their seasonal highs. This shift meant that instead of the usual monthly declines, price drops softened, and by November, the market reversed course posting slight gains.

Buyers locked in the lowest rates by September, which fueled a strong year end and contributed to the 12.2% annual price gain in 2024. The takeaway? Lower interest rates drive buyer demand and pump prices up—it’s as predictable as gravity.

How Will the Fires Impact OC Housing?

Rebuilding LA will take years and come at an astronomical cost, pushing many displaced homeowners southward in search of stability. That means increased competition in OC’s already tight market. Meanwhile, labor and materials—already in short supply—will become even scarcer. Tariffs on imported building supplies, like Canadian lumber and Chinese fasteners, could further slow progress.

Locally, expect longer build times, delayed developments, and rising costs. Deporting workers from an industry already suffering from labor shortages won’t help, either. Hence, OC housing supply will remain fairly constrained. In the short term, sellers should expect outsized buyer competition to deliver peak prices. But this will not hold forever. Those who list quickly will likely reap the greatest rewards.

**P.S. If you think this half of my January market report was insightful, just wait until you see the whole thing. I’m talking about deep dives, sharp analysis, and the kind of wisdom that makes you feel like a real estate insider (because, well—you will be). Don’t just skim the surface—immerse yourself in the full report over on my Substack. Your future self will thank you.

Visit: https://wendyhooperross.substack.com/p/more-more-more-how-do-you-like-it