Study: More New O.C. Homes Priced Below $300,000

New homes in Orange County still are among the most expensive in the nation, but a new study shows that builders, spooked by a sales slowdown over the past eight months, are pricing more of their product under $300,000 than in years past.

The First American Title Insurance Co. survey of all new homes being sold in the county from mid-February to mid-March shows that while the average sales price was $404,035--and the median, or halfway mark, was $375,900--about 455 homes were available at $300,000 or less.

That compares to only about 225 homes in the sub-$300,000 price range just six months ago.

The lowest-priced home in the survey, at $190,000, was a two-bedroom, two-bath model in Aliso Viejo built by J.M. Peters Co.--a Newport Beach firm that made its reputation as a luxury home builder offering homes in the range of $300,000 to $500,000.

Mark Hoover, an assistant vice president at First American Title, said the survey appears to confirm what industry consultants have been saying for months: County builders have priced homes out of the reach of many buyers and need to bring prices down to ensure a healthy market.

That is not to say that the county did not have high-priced new homes for sale. The most expensive homes in the survey, in Monarch Beach in Dana Point, were priced at $1.2 million.

The First American study shows that about a third of the 1,855 new homes on the market at the time the survey was conducted were priced at $400,000 or more. A year earlier, however, that figure was about 40%, or 210 of 515 new homes on the market.

The number of new homes on the market has increased dramatically in the last year. The March survey’s total was nearly double the 978 unsold units reported by First American just six months earlier in its survey of August, 1989.

The title insurance firm’s surveys provide a snapshot of conditions, trends and fluctuations in the county’s new-home market at the time each is taken. First American conducts the surveys twice a year, compiling information about every subdivision in the county that is selling homes.

The most recent survey shows a huge increase in the number of subdivisions actively selling homes--128, in contrast with 85 six months earlier and 146% more than the 52 of March, 1989.

It also shows a huge increase over the last year in the number of units builders say they are planning to construct. The current figure, 16,958 units, is more than 2.5 times the 6,664 units proposed a year earlier and is 35% higher than the 12,570 units proposed six months ago.

The increase in proposed units, Hoover said, shows how seriously developers took the threat of a housing slowdown when slow-growth proponents qualified a development-limiting measure for the ballot two years ago.

Developers raced to process as many applications as they could to beat the June, 1988, deadline that passage of the measure would have imposed on them. Although the slow-growth measure was defeated, the applications for building permits were already filed, and builders were reluctant to withdraw them.

So, the jump in the number of subdivisions and proposed housing units, Hoover said, reflects the cumulative effect of all those applications being processed and the building permits being issued.

“All the work the builders pushed through to beat the deadline,” he said, “showed up in the last part of 1989 and the early part of this year, and that’s what we’re seeing now. But we expect to see the number start to diminish again in future surveys.”

The large number of homes on the market--and the increased number priced at or below $300,000--has helped keep sales alive throughout the county.

The overall sales average of 1.2 units per week is down from 1.8 units a week six months earlier. But because there were more subdivisions selling homes in the most recent study, total sales were almost identical at 153.6 units a week, compared to 153 units a week last August.

RISING INVENTORIES--AND MORE TO COME

Current Unsold Inventory

The number of unsold homes reflects both a flattening of sales and an increase in the number of new homes being built. March 1989: 515 August 1989: 978 March 1990: 1,855

In the Planning Stages

A near-tripling of the number of homes planned is the result of developers’ fears that slow-growth efforts would stifle construction March 1989: 6,664 August 1989: 12,570 March 1990: 16,958

Source: First American Financial Corp.