Orange County Home Sales Rise 25%; Median $211,000
Sales of existing homes in Orange County jumped 25% in June, and the median price reached a record $211,038--despite indications that California’s hot housing market may be cooling off.
Single-family home sales dropped 7.8% statewide from May to June, the California Assn. of Realtors reported Monday, reflecting the combined effect of higher prices, rising interest rates and a shortage of houses available for sale. The county’s booming economy and a possible surge caused by anticipation of a slow-growth initiative may have contributed to sales activity in June.
“The state as a whole has probably peaked,” said Leslie Appleton-Young, director of research and economics for the trade group.
Statewide sales of existing homes are expected to be about 2% higher in 1988 than last year. But Orange County sales will almost certainly top that, the association said, despite some of the highest home prices in the nation.
Prices increased by about 4% both statewide and in Orange County in June, the association estimated.
The median price for a resale home in Orange County is now higher than only a few extremely expensive urban markets, such as New York and Honolulu. The priced topped $200,000 for the first time in May.
“It’s pricing out the first-time buyer,” Appleton-Young said. “Those people are having to look in some of the inland counties.”
About a third of the buyers in the market statewide are first-timers, she said, with probably a smaller proportion in Orange County.
Yet demand is so strong that sellers of houses in good neighborhoods often find themselves besieged by offers.
The problem is that there are few homes available to buy now.
Less Than a 4-Month Supply
Statewide, the inventory of homes for sale dropped to a record-low, 3.9-month supply, meaning that at the present rate buyers will snap up all the homes for sale in less than four months. Orange County Realtors report the same scarcity.
That’s one reason why the median price is so high. Another reason, particularly in Orange County, is that all the action now is in bigger, snazzier houses.
“Where before you used to see a lot of two- and three-bedroom houses being sold, now you tend to see more four-bedrooms and up being sold,” said Roger Cruzen, a spokesman for the trade association.
All over Southern California much of the sales activity is taking place in posh neighborhoods, such as Newport Beach in Orange County and Palos Verdes and Beverly Hills in Los Angeles County, said Tom Williams, president of the Southern California region of Coldwell Banker, a real estate brokerage.
“Most of the appreciation in prices is going on in the upper end of the market, and that’s the same all over the region, not just for Orange County,” Williams said. “And there are very few new homes being built in these areas, so there’s a lot less competition.”
The reason for the national buying frenzy is that home sales have been rising for five months as people try to buy before mortgage rates go up.
Rates for fixed-rate, 30-year mortgages averaged 10.46% last week, up about one-half of one percentage point from their low point in March; they are widely expected to continue rising.
Getting Jump on Prices
But in California, and particularly in Orange County, there are other pressures as well. The steep price increases have created their own demand as people try to buy before prices soar beyond their reach.
In May, just 22% of the families in the county could afford to buy the typical resale home, according to the Realtors association.
June’s median price was a cool 24% higher than a year ago, when the median price of a home in Orange County was $170,163.
The price began to soar early this year, and in February outpaced San Francisco, which had been the state’s most expensive housing market. The median price in San Francisco was $209,687 in June, up 21.1% from June, 1987.
Statewide the median price rose 19.1% for the year, reaching $167,428 in June.
Part of the increase has been simple appreciation, but the higher median price also indicates that larger houses are being bought and sold these days--a part of the market that was all but dormant until the last year.
“Until then, it was very quiet, there just wasn’t that much demand for anything over $350,000,” said Al Sloan, president of Tarbell-Realtors in Santa Ana.
“That’s one big reason why the average price is jumping so much, because the houses now are so much bigger.”
Local developers have been building new houses as fast as they can, taking out building permits for 4,900 single-family houses through May; there were 4,500 last year. New homes are selling briskly but not fast enough to satisfy demand.
New-House Median: $277,000
New houses are even more expensive than resale homes, with a median price for a new single-family house hitting $277,000 in the second quarter, according to the Meyers Group, a Corona consulting firm. In Orange County, the surge in June activity may also reflect buyers who jumped into the market because they expected the slow-growth initiative to pass and curtail home construction.
“In combination with high prices and rising interest rates, the possibility that there might not be many more houses built put a lot of people in the market,” said W. Steven Johnson, vice president of the Meyers Group.
Voters rejected the slow-growth initiative on June 7.
If home sales have hit their peak statewide--which remains to be seen--Orange County is probably not far behind, Appleton-Young said.
“While Orange County has a strong, resilient economy,” she said, “sometime this year interest rates and high prices are going to catch up to it too.”
Sales of existing U.S. homes up 5.3% in June. Business, Page 2.
HOME PRICES, SALES ACTIVITY IN STATE
MEDIAN SALE PRICE JUNE SALES ACTIVITY % Change % Change Region June 1988 June 1987 % Increase From May Frm Yr Ago Orange County $211,038 $170,163 24.0 +25.2 +18.6 Los Angeles $182,364 $148,670 22.7 +6.4 +5.8 San Francisco $209,687 $173,098 21.1 +9.4 -2.6 San Diego $147,605 $125,488 17.6 +14.3 +15.1 Sacramento $92,708 $87,276 9.7 +15.7 -8.5 Riverside/ $108,567 $96,922 12.0 +7.3 +15.8 San Bernardino Ventura $195,209 $160,303 21.8 +2.6 -13.3 California $167,428 $140,620 19.1 -7.8 +4.8
Source: California Assn. of Realtors
