Orange County Real Estate
The repo market is the plumbing of the financial system, where short-term borrowing and lending keep liquidity flowing. In a typical transaction, one party sells Treasuries or mortgage-backed securities with an agreement to repurchase them later at a slightly higher price. This system underpins interest rates and credit conditions nationwide.
The Federal Reserve uses repos and reverse repos to guide monetary policy. The Overnight Reverse Repo Facility (ON RRP) has served as a safety valve for excess cash since 2013, but its decline signals that buffer is gone.
At its peak in May 2023, the ON RRP facility held $2.4 trillion. By September 2025, balances had collapsed to just $18.8 billion. Two main drivers explain the shift:
This has pushed up short-term funding costs and pressured sectors like commercial real estate, where $1.5 trillion in debt comes due by 2026.
Higher repo rates and QT directly influence the 10-year Treasury yield, the benchmark for mortgage rates. Even if the Fed cuts short-term rates, the runoff of mortgage-backed securities keeps mortgage spreads wide. That means rates stay elevated, prolonging the affordability crunch.
In Orange County, many homeowners are “locked in” at 3% mortgages and reluctant to sell, keeping inventory tight despite reduced demand.
This data suggests a cooling market, shifting negotiating power from sellers to buyers—but not a collapse.
See local breakdowns in our guides: Laguna Niguel, Mission Viejo, San Clemente.
For Buyers: More inventory and longer listing times create opportunities. Leverage your negotiating power, especially on homes lingering on the market.
For Sellers: Overpricing risks stale listings. Success now depends on realistic pricing, professional staging, and flexibility.
The draining of the ON RRP signals that the era of “easy money” is over. For Southern Orange County, this means a more balanced housing market—cooling, not crashing. The region’s strong economic base and persistent supply constraints provide resilience, but discipline and vigilance are required from both buyers and sellers.
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