Rank 2nd in State for ’86 : Home Buyers in County Go on Spree for Resales

Spurred by declining interest rates and advance word that the new federal tax law revisions would make home ownership one of the last good tax shelters, home buyers went on a spree in Orange County during 1986.

The county ranked second in the state in the increase in the number of residential resales during 1986 and posted the third highest median sales price of resale housing, according to statistics released Tuesday by the California Assn. of Realtors.

The number of single-family homes resold in the county last year increased 19% from the 1985 sales, while the median price for resale housing in the county hit $147,743, up 8.7% for the year, the report says.

Statewide, a projected total of 484,570 single-family homes were resold in 1986, up 19% from 407,240 in 1985. The median sales price was $131,530, an 11.5% increase from the previous year’s median of $117,930.

Actual numbers of housing resales by county are not available, a CAR spokeswoman said, because the association bases its figures on projections derived from sales statistics compiled from 48 realty boards throughout the state. Only four of the more than one dozen realty boards in Orange County report to the association.

According to the CAR report, San Diego County topped the state in single-family residential resales last year, with a 27.1% annual growth rate. The median price of $118,170 increased 10.3% from the prior year.

Highest Price Tag

The median price tag on resale homes was highest in San Francisco, at $161,150, while Santa Barbara was second in price, with a median of $153,289, up 13.6% for the year.

But resale activity in those counties fell far below Orange County’s pace, with a 12.8% increase from 1985 in San Francisco County and a 13.6% hike in Santa Barbara County.

The Riverside-San Bernardino counties area also was ranked as one of the fastest-growing in the state, with an 18.2% annual increase in resales and an 8.3% jump in the median price of resale housing to $94,534. The association report said an estimated 42% of the two counties’ wage earners made at least the $31,456 minimum annual income needed to qualify for a $94,500 home.

By comparison, only 32% of Orange County households earned at least the $49,162 minimum annual income to qualify for a median-priced resale home. In San Francisco County, the minimum qualifying income for a resale home was $53,623, and only 17% of all households met or bested that mark.

In Los Angeles, home buyers saw the median price of resale homes increase 8.5% to $128,799, and 1986 sales activity rose 13.2%. Only 29% of Los Angeles households earned at or above the minimum annual income of $42,858 needed to qualify for that county’s median-priced resale home.

Dent in Reserves

Still, enough people came up with down payments to put a sizable dent in the reserve of resale housing throughout the state, the realtors association said.

“With such a strong rate of resales throughout the state, our biggest problem was the lack of inventory of existing homes for sale, said Joel Singer, CAR’s chief economist.

During 1986, he said, the inventory of listed but unsold resale homes dropped 20% below 1985 levels, and by December, the inventory hit a near-record low of 5.9 months (the length of time it would take all currently listed homes to sell). That, Singer said, suggests “a continued squeeze in the early 1987 marketplace.” Other broad market indicators, such as average time on the market, also declined in 1986, he said.

“In our general area, we can’t even keep a listing” of houses for sale, said Elizabeth Zipperman, the owner of a Century 21 franchise in Fountain Valley. “They’re selling as fast as we can get them.”

Local realtors and consumer experts attribute the county’s house-buying rush primarily to low-interest rates on mortgages, now hovering around 9% for fixed-rate, 30-year loans, contrasted with rates of about 14% in 1984--when housing prices dropped almost 1% to offset the high-interest rates.

Additionally, many realtors believe that publicity throughout most of the year about the 1987 federal income tax bill’s retention of mortgage interest as the only fully deductible consumer interest spurred many housing purchases.

MEDIAN RESALE HOUSING PRICES

1982 1983 1984 1985 1986 Orange County $132,831 $134,689 $133,666 $135,810 $147,530 Statewide $110,020 $122,590 $112,470 $117,930 $131,530

Source: California Assn. of Realtors