Detached Home Sales in O.C. Drop 26% in April as Spending Spree Ends
Sales of existing single-family homes in Orange County plunged 26% in April, a sign interpreted by some market analysts as the official end of a yearlong spending spree that pushed the price of housing beyond the reach of many would-be buyers.
Still, the California Assn. of Realtors reported Wednesday that the median price of a detached house rose 2% to $243,485 last month, indicating that softening sales have not yet caused prices to plateau.
Orange County’s month-to-month sales decline was the biggest in the state but the same pattern of falling sales and increasing prices was evident in almost all of the residential housing markets surveyed by the Realtors group.
“This is the firmest evidence we have seen that things have slowed down,” said David Hensley, director of California forecasting at the UCLA Business Forecasting Project in Los Angeles.
Sales of existing homes fell 14.1% across the state, the Realtors association said. It was the largest such decrease since January, 1987, when sales fell 22.4% following implementation of the Tax Reform Act of 1986.
The statewide median house price topped the $200,000 mark for the first time, rising 2.5% to $200,784 in April from $195,815 in March. The statewide median has increased 25.8% since April, 1988, when it stood at $159,542.
Real estate agents in Orange County substantiated the trade group’s sales statistics. “Houses last year sold in less than 30 days. Now you’re looking at 90 to 180 days at least,” said Sherry Powers, senior vice president of Grubb & Ellis in Mission Viejo.
Economists explained the seeming contradiction of declining sales and rising prices by saying house prices do not respond as quickly to market forces as sales.
“What we expect to see as homes stay on the market a little longer, the prices will start to level off,” said Roger Cruzen, spokesman for the Realtors trade group. “We don’t expect them to decline, certainly. But the level of price appreciation should moderate.”
San Francisco was the state’s most expensive housing market in April, with a median price of $261,520, the trade group reported. Ventura County was second with $249,847. Orange County’s $243,485 median price ranked third.
Sales in the Los Angeles area fell 2.6%, while the median price gained 3.9% to $215,871. In the San Diego area, sales fell 20.3%, and the median price increased 5.4% to $176,057.
The Riverside-San Bernardino area was the only surveyed region that experienced a decline in price. The median price in the Inland Empire fell 0.6% to $119,124, while sales were down 11.1%.
Rising house prices and sluggish sales have caused a problem for homeowners trying to trade up to more expensive homes, because many are facing delays in selling their old homes.
“Buyers are having to get swing loans and home equity lines of credit because the funds to buy a new home aren’t available yet because they haven’t sold their old house,” said Bonnie Kalen, an Irvine loan representative. “There are buyers out there, just not as many as there were last year.”
Real estate agents said price increases have already started to taper off since April. “Sellers are not getting top dollars for their properties,” Powers said. “They have to be realistic in their pricing or they just sit on the market.”
Joel Singer, economist for the real estate group, agreed. “There is more price undercutting in the marketplace now than there was 6 or 9 months ago,” he said.
Real estate experts said the drop in sales was not unexpected because first-time home buyers have been sidelined by soaring house prices and rising mortgage interest rates, which have jumped nearly 2 percentage points during the last 6 months.
While many buyers have turned to condos as prices of detached homes escalated, statewide sales of attached housing also slumped in April, falling 10.8% for the month. The median price of a condominium in California rose 2.8% to $136,575 from $132,847 in March.
Based on April sales activity, it would take 5.6 months to deplete the current inventory of single-family houses listed for sale, the trade group estimated. April’s inventory, up from 4.7 months in March, is the highest total since May, 1986.
“There is no question that the inventory situation has improved dramatically,” Singer said. “It’s a pretty good sign that the sellers’ market of the last year or so is moving toward a more balanced market.”
The real estate group surveys sales of existing residences listed with brokers in selected areas of the state. Its figures exclude new houses.
But an earlier report covering all real estate transactions in Orange County detected the same trends as the real estate association. Earlier this month, TRW Real Estate Market Information said residential sales fell 19% in April, while the average home price rose 6% to $238,353. The TRW survey included both detached housing and condominiums.
HOME PRICES AND SALES ACTIVITY
MEDIAN SALE PRICE % Increase Region April, 1989 From 4/88 Orange County $243,485 24.7 Los Angeles $215,871 27.1 San Francisco $261,520 33.7 San Diego $176,057 28.0 Riverside/San Bernardino $119,124 17.6 Ventura $249,847 32.5 California $200,784 25.8
APRIL SALES ACTIVITY % Change % Change From March From Yr Ago Orange County -26.0 -22.7 Los Angeles -2.6 +1.0 San Francisco -13.5 +2.5 San Diego -20.3 -4.0 Riverside/San Bernardino -11.1 +2.6 Ventura -9.1 -12.6 California 14.1 +1.0
Source: California Assn. of Realtors
