Summer Sales of New, Resale O.C. Housing Declined
Reflecting a growing concern about a possible recession, sales of both new and resale homes in Orange County continued to decline in the late summer months, two real estate information services reported Tuesday.
Sales of existing single-family homes in the county fell 23% in August from a year earlier, the California Assn. of Realtors said. Statewide sales declined 15%.
New home sales were even worse. For a three-month period that ended Sept. 19, new home sales, including condominiums and townhouses, plunged 42.4% in Orange County, said the Meyers Group, a Corona-based consulting firm.
The decreasing activity occurred despite a drop in both new and existing single-family home prices and reflects a growing economic unease by consumers, local economists said.
While the Aug. 2 Iraqi invasion of Kuwait exacerbated the slowdown, prospective home buyers in the county’s high-priced market were adopting wait-and-see attitudes before then, said Phillip E. Vincent, vice president and regional economist for First Interstate Bank in Los Angeles.
“And even though Orange County new homes are on upper end of scale, we have a similar declining sales situation in Palmdale and Lancaster (desert areas of Los Angeles County), where homes are much less expensive,” Vincent said.
Chapman College economist James Doti said that even though consumers are holding back, he believes that housing sales are “unnaturally low right now because of the Middle East crisis. They should pick up a bit as soon as that situation is resolved.”
Doti said he thinks that the state and local housing markets are in a recession, but “I don’t expect this area to hit the depths reached on the East Coast, where there is a real depression in housing”
In Orange County, new home buyers were abandoning the single-family housing market in droves as prices, although lower than a year ago, remained among the nation’s highest.
Sales of new single-family homes plummeted 62.3% to 634 units for the three months from 1,731 units in the third quarter of 1989, the Meyers Group found.
The median selling price of a new single-family home in the county, the company said, was $325,000 during the third quarter, down from $350,000 in the same period last year.
Attached housing--mostly condos and townhouses--made up the bulk of the new home market for the quarter, a Meyers spokesman said, accounting for 63% of all sales--the highest level ever. But condo and townhouse sales still were down from a year ago, with 1,078 units sold--a 13% drop from 1,239 units in the 1989 third quarter.
The median price of new condos and townhouses rose 7% from a year earlier--to $184,990 from $173,000--a hike related to a slight increase in median square footage and to efforts by builders to increase the quality of units as they becomes the predominant new housing form in the area.
At the same time sales have fallen off, the inventory of new homes available for sale in the county is growing. The total number of new, unsold single-family homes climbed to 2,071 units on Sept. 19, up 66% from the end of the third quarter last year. And the number of new condos and townhouses hit a one-year high of 1,556 units, up from 540 a year earlier and nearly 30% more than the total in mid-July.
The growing inventory has spurred builders to slow production of new units and the result may be one of the steepest drops in residential building permit activity in the county in a decade.
The Construction Industry Research Board reported last month the builders pulled permits for only 569 residential units in July. That was the lowest one-month total since the height of the county’s last real estate recession in 1982, and early indications are that the August total could be even lower.
In the resale market, the Realtors association said the median price of a single-family home in the county dropped 2.2% in August, to $239,649 from $244,947 a year earlier. But that decline--the third consecutive month that Orange County resale prices have dropped--was not enough to spur buyers.
“The people that are buying now are people buying out of necessity rather than just to have a bigger, better house,” Doti said. “They are, in large part, people buying first homes, so the price drops we are seeing may not be real decreases, just the result of people only buying the lower-priced homes on the market.”
HOME SALES DECLINE SHARPLY
Home resale activity was off 22% in August from the same month a year ago, while prices were down as well, falling 2.2% in August from the level of a year ago. Separately, attached home sales declined 13.0% in the third quarter from the year-earlier quarter, while sales of new detached homes fell 63.4%.
Source: Calififornia Assn. of Realtors and the Meyers Group
