O.C.’s Housing Revival Continues in 2nd Quarter : New homes: Prices fall, sales rise and inventory shrinks, studies show. But the numbers don’t indicate a quick recovery from the overall real estate slump.
Orange County’s modest housing revival continued in the second quarter as new home prices fell, sales rose, inventory shrank and builders continued to secure permits for future residential construction, according to a pair of studies released Tuesday.
But the numbers, while positive, do not portend a quick recovery from the overall real estate industry slump that began in mid-1989.
Most observers believe that the sales spurt that occurred immediately after the Persian Gulf War has ended. Home builders who gathered in San Francisco last week for the annual Pacific Coast Builders Conference seemed resigned to a long, slow climb back to a normal market.
Perhaps the most positive sign of builder optimism in Orange County is the continued growth of residential building permit activity. In May, the latest month for which figures are available, builders obtained permits to construct 1,158 new homes and apartments in the county in coming months.
It was the largest monthly tally since June, 1990, the Burbank-based Construction Industry Research Board said Tuesday. And included in the May total were permits for 632 single-family homes--the most activity in that housing segment since December, 1989.
Coupled with the building permit report Tuesday was word from the Meyers Group, a Newport Beach market survey firm, that builders sold 2,619 new homes and condominiums in Orange County in the second quarter--the best three-month period since the third quarter of 1989, when 2,970 homes and condos were sold.
Meyers analyst Buck Panchal tempered the good news by observing that sales were strongest in the first part of the quarter. He said some builders reported slower sales in the second half of the period.
The report on sales of new homes found that sales were helped by a significant decrease in the median price of a single-family home, which fell 10.7% to $317,950 from $356,000 in the second quarter of 1990. It is the lowest median price reported since the fourth quarter of 1988.
Builders say the declining price comes in part from efforts to shave profits and in part from cheaper labor costs as subcontractors have dropped their prices to compete in a dramatically limited market.
Echoing others in the industry, Panchal said that the county’s shrinking inventory of completed but unsold homes and condos is likely to combine with the relatively lower level of new construction to keep supply well below demand and lever prices higher once the economy begins recovering.
The county’s inventory of new homes at the end of the second quarter stood at 2,372 units, down 26.5% from 3,228 units a year earlier, the Meyers report said.
New Single-Family Housing Unit Permits May, 1989: 948 May, 1991: 632 Source: Construction Industry Research Board
New Multifamily Housing Unit Permits May, 1989: 1,133 May, 1991: 526
