Orange County Home Tab for Resales Hits $202,760
The median price of resale homes in Orange County vaulted to a record $202,760 in May, pushed by dwindling housing supplies and consumers’ fears of higher interest rates.
A dash of the speculative fervor last seen about a decade ago added to the forces that drove the county median for a single-family, detached home above the $200,000 mark for the first time, according to statistics reported Monday by the California Assn. of Realtors.
New housing prices were even steeper, with the median for detached, single-family homes hitting $276,000 in the second quarter, according to an unrelated study by the Meyers Group, a regional real estate consulting firm with head-quarters in Corona. That represented a staggering 24% increase from the first-quarter median of $223,000.
The record-breaking prices made Orange County the highest-priced urban housing market in the state for the fourth consecutive month.
Industry sources say that housing prices in the county also are among the highest in the nation, outstripped only by the Honolulu and New York City markets.
In its latest survey of 62 metropolitan areas, the National Assn. of Realtors last month reported first-quarter median resale prices of $198,400 for Honolulu, $186,600 for New York City and its suburbs and $183,300 for Orange County. The national group does not track monthly prices.
For California in May, according to the state realtors group, the statewide median resale price was $160,073, up 1.9% from April’s median of $157,033 and 13.4% higher than the May 1987 median of $141,140.
Orange County’s median resale price of $202,760 was 2.4% higher than the $198,310 reported in April and 18.5% above the year-earlier median of $171,153.
San Francisco, which had been the state’s highest-priced housing market until outpaced by Orange County in February, remained in second place last month with a median resale price of $190,246. The median is the midway point, meaning half of the homes in an area sell for more and half sell for less.
The housing market in Orange County long has been an active and expensive one, according to Steve Johnson, Meyers Group vice president.
‘Dynamite Place to Live’
The soaring appreciation, comparable to that in Honolulu and Manhattan, he said, “is because Orange County is a dynamite place to live. You have proximity to the arts, the beaches, a lot of services and a great climate. So housing prices will continue to escalate.”
But more than climate and life style has been at work in recent months in the Orange County real estate market.
For more than a year and for a variety of political and economic reasons, the supply of new housing in the county has not been sufficient to meet normal demand, according to industry specialists.
Sales activity in the county for resale homes in May was up 36.6% from the levels reported in May, 1987--the second-highest annual increase in the state--but was up only 7% from the previous month for one of the lowest monthly changes reported.
The low monthly hike in sales activity combined with the steep increase in prices, said state realtor association spokesman Roger Cruzen, reflected both a high level of sales in the previous month and the fact that, when compared to demand, there are relatively few homes on the market in Orange County.
Effects of Measure A
And demand has been running well above normal since the beginning of the year, when it became apparent that a slow-growth initiative would qualify for the county ballot. That initiative--Measure A--was defeated by voters earlier this month, but the campaign leading up to its defeat helped inflate prices and fueled a fierce appetite for housing.
“A lot of the price appreciation in the past three months was the result of a buying frenzy that was a direct result of proposition A” and consumers’ fears that passage of the measure would dramatically reduce the amount of new housing, Johnson said.
Additionally, said Marta Borsanyi, managing partner of the Newport Beach office Robert Charles Lesser Co., a national real estate consulting and marketing firm, “people are buying more house than they need.”
“With prices escalating the way they are, a lot of people are upgrading, getting more house than they can use, and counting on increased demand to make them rich when they sell a few years from now. We are seeing some of the same kind of speculation that we saw in the late 1970s,” she said, “except this time it is by owner-buyers, not by investors.”
Still, Johnson said analysts with his firm expect that the housing market in Orange County will calm down a bit now that the slow-growth measure has been defeated. “We think price escalation will soften in the third quarter and slow down to a manageable 5% or so in the fourth quarter,” he predicted.
Boom in Other Counties?
The Orange County experience, however, may be repeated in several surrounding counties. “We’ve seen quite a bit of sales activity in Riverside and San Bernardino in recent months,” Johnson said, adding that Riverside County residents will vote on a slow-growth initiative in November. And San Diego city officials recently imposed an annual lid on building permits that effectively halved the amount of housing that can be built there each year.
In Riverside and San Bernardino counties, according to the California Assn. of Realtors’ survey, the median resale price in May was $104,025, up 2.7% for the month--the third highest increase in the state--and 9.1% higher than the year-earlier median of $95,326. Sales activity in the two counties for May was up 29.2% for the month and 37.9% for the year.
In San Diego County, the May median of $142,256 was up 3.4% from April--the state’s highest monthly price hike--and was 10.1% above the $129,225 reported a year earlier.
HOME PRICES AND SALES ACTIVITY IN STATE
MEDIAN SALE PRICE MAY SALE % Change Region May 1988 May 1987 % Increase From April Orange County $202,760 $171,153 18.5 +7.0 Los Angeles $173,982 $149,659 16.3 +13.3 San Francisco $190,246 $170,499 11.6 +11.5 San Diego $142,256 $129,225 10.1 +17.2 Sacramento $94,224 $89,567 5.3 +10.4 Riverside/ $104,025 $95,326 9.1 +29.2 San Bernardino Ventura $195,477 $157,845 23.8 +7.6 California $160,073 $141,140 13.4 +13.6
S ACTIVITY % Change Region From Yr Ago Orange County +36.6 Los Angeles +16.8 San Francisco -2.8 San Diego +31.1 Sacramento +5.3 Riverside/ +37.9 San Bernardino Ventura -51.0 California +9.4
Source: California Assn. of Realtors
