Orange County Housing Market Outperforms Neighbors : Real estate: Figures for 1990 show sales dropped just 3.3% here. The drop for the 5-county Southern California region was 15.1%.
Orange County’s residential real estate market outperformed those of other Southern California counties in 1990, with sales dropping only 3.3% here and the average home price falling 1.2%, a real estate data firm reported Tuesday.
That compares to a sales dip of 15.1% for the five-county Southern California region last year and to a 3.7% increase in the average price, according to TRW Real Estate Information Services.
The sales figure for the region in December hit the lowest point in three years. Regionwide, it was down 30% from December, 1989. Sales in Orange County fell 26% from the same month the year before.
Real estate officials said the short-term outlook continues to be dismal, particularly because of uncertainty caused by the Persian Gulf War and the slump in the economy. But there is some hope, they said, that the market is near the bottom and that a turnaround is possible later this year.
Orange County’s comparative strength was powered largely by a slight lowering of prices at a time when they were continuing to rise in the other counties, the report shows.
The average selling price of a home in Orange County last year, although still the highest in the region, dropped 1.2% to $248,167 from $251,178 in 1989.
In all, realtors and new-home builders in the county sold a total of 45,058 homes and condominiums in 1990, down from 46,571 in 1989, according to TRW.
The next-best performance was turned in by San Bernardino County, where the sale of 34,115 homes, 4,067 fewer than sold in 1989, represented a 10.7% decline for the year.
That sales in Orange County declined only slightly last year seems to indicate that the local market took its biggest hit in 1989. That year, sales were off 24.1% from the record pace of 1988. The market was in a frenzy two years ago because of slow-growth pressures and a shortage of units.
Last year, the market was hindered by the general economic slowdown and by the crisis in the Persian Gulf, which put a damper on consumer confidence. The war is now the biggest hindrance to recovery, real estate officials said.
“The short-term outlook for housing sales is negative,” TRW spokesman Martin Dee said. “January traditionally is a weak month for housing sales even when the economy is strong and optimism is high. But now, with the war in the Persian Gulf and the continuing economic downturn, people will suspend their major buying decisions to a greater extent. You just don’t buy a new home when you’re worried about losing your job or when you’re glued to the tube” watching war news.
With all that going on, the relatively stable sales pace in Orange County for the year leads some industry observers to believe that 1990 signaled at least the beginning of the end of the decline in the local real estate market.
“If you subscribe to the theory that the worst is over, and I do, then this is good news,” Philip Bettencourt, a Newport Beach real estate consultant and president of the county Building Industry Assn. trade group, said of the 3.3% sales decline.
The TRW figures show that demand for homes leveled off in Orange County while continuing to decline in other areas.
Bettencourt said an important factor in the Orange County market was the decline in selling prices. New home builders and owners of existing homes recognized that the county’s soaring housing costs were forcing prospective buyers to look elsewhere.
The resale market--that is, existing or used homes--makes up the bulk of the Orange County residential market. The average selling price of a resale home in 1990 dropped 1.7% to $243,232 from $247,366 in 1989, TRW reported.
For new homes in the county, the average selling price was virtually unchanged. It was $264,488 in 1990, only 0.1% below the 1989 average of $264,798.
Bettencourt said that the apparent stabilizing of sales, combined with a steep decline in recent months in the number of residential building permits issued in the county, means that the inventory of unsold homes will shrink at a faster pace in 1991 than it did during the past two years. In addition, builders are finding it more difficult to obtain financing because of the savings and loan industry crisis, he said.
The result, Bettencourt said, is that builders will not be able to get into production as quickly as they were in the past when market demand picked up. “And that means there won’t be another big run-up in inventory as there was in the late 1980s, and that is good news for home sales,” he said. Supply will not outstrip demand for a few years, he noted.
Bettencourt, who just returned from the National Assn. of Home Builders annual meeting in Atlanta, said that the housing market nationwide continues to be in a recession. “But there wasn’t nearly the doom-and-gloom at the convention that there was last year,” he said.
ORANGE COUNTY’S HOUSING MARKET
Housing sales in Orange County declined 3.3% last year. That performance was much better than for the five-county Southern California region as a whole, which suffered a 15.1% sales decline. But Orange County was the only one in which average sales prices fell during the year.
TOTAL UNITS SOLD % CHANGE COUNTY 1988 1989 1990 1988-90 1989-90 Orange 61,422 46,571 45,058 -26.6 -3.3 San Bernardino 36,437 38,182 34,115 -6.4 -10.7 Los Angeles 164,862 139,865 116,860 -29.1 -16.5 Riverside 34,569 42,064 34,557 0 -17.9 San Diego 56,307 46,537 35,402 -37.1 -23.9 Total Sales 353,597 313,219 265,992 -24.8 -15.1
AVERAGE SALES PRICES TOTAL UNITS SOLD % CHANGE COUNTY 1988 1989 1990 1988-90 1989-90 San Bernardino $114,036 131,263 138,363 +21.3 +5.4 Riverside 118,631 136,486 148,421 +25.1 +8.7 San Diego 160,635 187,594 196,233 +22.2 +4.6 Los Angeles 200,914 224,844 232,635 +15.8 +3.5 Orange 211,986 251,178 248,167 +17.1 -1.2
NEW VS. USED HOME SALES AND PRICES IN O. C.
NEW HOME USED HOME Year Sales Avg. Price Sales Avg. Price 1989 7,704 $264,798 37,867 $247,366 1990 7,151 264,488 37,907 243,232
Source: TRW Real Estate Information Services
