2nd-Quarter New Home Sales Post a 20% Jump in County Over 1987 : REAL ESTATE
Sales of new homes in Orange County jumped 20% during the second quarter compared to a year ago, according to the Meyers Group consulting firm, which said 1988 could be a record sales year.
Why so many sales during the quarter? Many buyers entered the market for new homes in the spring because they expected voters to approve a countywide slow-growth ordinance, the Meyers Group said. The initiative failed at the ballot box in June.
While many real estate agents say the threat of a building slowdown from the ordinance did not push buyers into the market for used homes, Meyers Group analysts said they think that the initiative strongly influenced buyers of new homes.
In addition, the analysts think the threat of more slow-growth ordinances in cities around the county will push more people into the market for new homes this year, keeping sales strong.
Next year, however, is a different story: Rising housing prices will force many prospective buyers to look outside the county, and a scarcity of land means fewer homes will be built.
Already, new single-family homes reached a median price of $277,000 by the end of June, up $53,000 or 24% from the first quarter of the year, the consulting firm said.
And the inventory of new homes is extremely tight: Only 722 new houses and condominiums were available for sale in the entire county at the end of June, compared to 1,056 in March. Builders, already concerned about a drop in sales next year, are being more cautious about starting construction, according to W. Steven Johnson, a Meyers Group vice president.
“For example, there are no houses to speak of being built in the north county at all,” Johnson said.
Altogether, 1,769 new single-family homes and 1,312 new condos were sold during the second quarter.
Putting those figures in perspective, this year’s second quarter saw a big jump compared to last year because sales were tepid last spring due to rising interest rates.
This year could be as strong a year for sales as 1986, the post-recession record year, Johnson said. But look for a downturn next year.