Why “Non-Traditional Distressed Sellers” Will Likely Be Among the First to Act by Year-End

by Ryan Knapp

In real estate, distressed sellers typically bring to mind foreclosures, short sales, or financial hardship. But there's another set of sellers, let's call them non‑traditional distressed sellers, who might just be the early movers as the Orange County market shifts into year-end.

Who Are Non-Traditional Distressed Sellers?

These are homeowners who may:

Have lost their job or experienced income reduction (e.g., due to economic slowdowns, industry changes, or health crises), even if they're not facing foreclosure.
Hold inherited properties they don’t want to manage.
Have low‑interest mortgages (say 3–4%) and face the choice of selling at today’s higher rates, or holding, but cashing out before homes cool further.
Own vacation rentals or second homes impacted by reduced tourism, or landlords facing tenant turnover and inflated costs.
Operate small businesses, think local restaurants, studios, or services, hit by inflation or staffing challenges, pressing them to liquidate real estate holdings to stabilize.

These sellers often prefer a smooth, fast, and less price‑pressured exit—ably anticipating a market cooldown rather than a frantic bargain.

What's Driving Them to Consider Selling by Late 2025?

Let’s look at the Orange County housing landscape as of August 27, 2025:

1. Inventory Is Rising... But Heat Isn’t Gone Yet

Active listings sit around 5,071, up 48% year-over-year, though far below past peaks seen in the Great Recession.
Count of single-family homes in July was 4,952, swelling 52% over July 2024, and up nearly 5% month-over-month from June.
That said, in the most recent two weeks, inventory climbed just 21 homes, hinting at a possible seasonal plateau—not panic.

2. Home Prices Are Cooling

The countywide median home price slipped from about $1.23 million to $1.175 million in August—a drop of $55 K in one month.

3. Distressed Sales Remain Rare

True distressed closings make up less than 0.2% of all transactions.
There’s little panic in the market—no rushing to list at steep markdowns.

4. Still Among the Priciest Markets Nationwide

As of mid‑2025, Orange County ranks among the most expensive housing markets in the U.S., with average home prices exceeding $1.6 million.
That means listing now—even amid softness—might still return healthy equity.

What This Means for Non-Traditional Distressed Sellers

Why they might choose to sell before year-end:

Factor	Why It Matters
Higher equity base	Selling during a minor cooling phase still captures sizable gains due to historically high prices.
Favorable—but not runaway—demand	Buyers remain active, especially for well‑priced, well‑presented homes.
Anticipated winter lull	Historically, home buying slows in late fall/winter, so acting now avoids seasonal drag.
Low distressed competition	With only <0.2% distressed listings, sellers can command attention—but waiting could bring more competition.
Interest rate sensitivity	Borrowers are watching small rate shifts—today’s sub-7% rates (e.g., 6.57%) are attractive.
Opportunistic planning	Some sellers may want to close before Q1 to optimize tax planning or reinvestments.

Suggested Action Points for This Seller Segment

Evaluate equity buffer vs. market trends: Even with a $55K dip, equity remains strong. A timely sale could still return large profits.
Price strategically: Set a competitive but fair price to attract strong buyers quickly.
Target buyers actively: Work with an agent who knows how to market to second-home buyers, downsizers, or investors still eager amid rising inventory.
Time listings smartly: Fall-winter inventory gluts can mute demand—closing before that may yield faster, smoother deals.

In Summary

Non-traditional distressed sellers, whether due to lifestyle changes, financial recalibration, or market anxiety, are well-positioned to act before year-end. The Orange County market may be softening slightly, but it's still robust, with low distressed saturation and competitive asking prices.

By moving now, these sellers can balance urgency with opportunity, capturing premium equity before winter dormancy and giving themselves time to reinvest or reposition financially.

Let me know if you'd like to expand any section, such as buyer psychology, agent strategies, or deeper data dives!