Median Home Cost Spurts to $234,934 in Orange County

Real estate brokers sold fewer houses in Orange County in September, but the demand was still so heavy that buyers drove the median price up to $234,934.

That was a 4.5% price increase in just one month, the California Assn. of Realtors said Monday, keeping county resale housing prices among the highest in the nation.

But those big jumps in prices may have peaked, real estate brokers around the county said.

“Houses are sitting around for as many as 60 days now without selling, compared to only a few hours this spring,” said Tom Baron, a broker at Re/Max of Irvine.

“The person who was trying to sell his house by tacking on another $50,000 more than his neighbor got is finding that his house just isn’t selling.”

Usually Drops Off in the Fall

Home sales and price appreciation usually drop off in the fall. But some experts think prices are so high that they are finally cooling off the torrid market in the county, where prices jumped 36.6% in the last year.

Fewer than one in five of the county’s families theoretically can afford a median-priced house these days, assuming that they are first-time buyers making a standard down payment.

That means the only people out shopping for a house in any numbers are the county’s more affluent residents, who represent only a small slice of the potential home-buyer population.

“Prices have got to the point where the market can’t really sustain them any longer,” said Joel Singer, chief economist for the realtors group.

A big part of the market now is buyers who already own a home and are rolling over the equity they have built up. But even these buyers are finding houses too expensive, Singer said.

While experts perceived demand to be tapering off, it is expected to remain relatively strong: The trade association still forecasts an appreciation rate of 10% to 20% for next year.

But that would be far below the 36.6% rate from September, 1987, through September, 1988, and the 35% rate over the previous year.

Here’s a look at September home figures in Orange County:

The number of houses sold during the month--excluding new homes--dropped 10% from August, which is typical for the fall, said the realtors association.

1987 Strong in Terms of Sales

By contrast, 1987 was stronger in terms of housing sales: Sales increased nearly 4% from August to September last year.

Last month’s price increase of 4.5% from August’s $224,828 was hefty, but the association cautioned against reading too much into one month’s figures. Last September, for instance, prices rose just 0.2%, despite strong sales.

A year ago, buyers could get a median-priced used house for $171,990.

The astonishing spurt in demand for homes this year--and the subsequent jumps in price--have astonished most market observers.

But the county isn’t all that different from the rest of the state. It is just more extreme.

For California as a whole, September was a strong month in sales, which rose 6% from August.

The state’s median price for a single-family home was $174,094, up 1% from August and 18% from a year ago.

Most of the California market is considered expensive and getting more so by people who live elsewhere: The median price of a home nationwide in August--the latest month available--was $91,300.

A recent forecast by Coldwell Banker, a real estate brokerage, predicts strong sales through the fall in the Western states, propelled partly by people who believe that they may be frozen out of the market permanently if they don’t buy now.

Construction Curtailed

That sentiment is especially strong in ultra-expensive Orange County, where strong slow-growth feelings have also threatened to curtail housing construction.

“The county has an extreme shortage of housing inventory, especially in the affordable price ranges, and a booming economy that keeps the population growing,” said Singer, the economist.

“Put that together with people’s perception that it’s not going to improve anytime soon, and you can see what’s behind this phenomenal demand.”

CHANGE IN CALIFORNIA HOME PRICES

Comparison of median resale prices by region in California for September, 1988, and September, 1987.

Region Sept. ’88 Sept. ’87 % Change Orange County $234,934 $171,990 +36.6 Santa Barbara 196,666 209,848 -6.3 Barstow/ High Desert 83,846 81,667 +2.7 Ventura 220,351 166,261 +32.5 Los Angeles 191,166 157,195 +21.6 San Francisco 216,510 176,596 +22.6 San Diego 153,615 134,900 +13.9 Sacramento 98,226 91,667 +7.2 Riverside/ San Bernardino 113,885 100,441 +13.4 Monterey 191,190 165,217 +15.7 Central Valley 91,479 85,723 +6.7 Palm Springs/ Lower Desert 103,889 104,166 -0.3

Source: California Assn. of Realtors