7.6% O.C. Drop in Resale Home Prices Tops U.S.

Dragged down by a seemingly endless recession and price cutting by new home builders, the median price of previously owned single family homes in Orange County during the second quarter fell 7.6% from the same period in 1992, the National Assn. of Realtors reported Tuesday.

The Orange County drop was the nation’s steepest, according to the association, and brought the median price of previously occupied homes here to $219,900 from $238,000 in the year-earlier period.

“The basic cause in my area is supply and demand,” said Huntington Beach realtor Kirk Kirkland. “There are far more sellers than buyers right now, and that’s a sure recipe for declining prices.”

Los Angeles County didn’t fare much better. The median price of a resale home there dropped to $202,300 in the second quarter from $216,600 a year earlier, a 6.6% decline that made it the second biggest loser in the nation.

The report heaps more bad news on local homeowners who once reveled in double-digit price increases but have seen their housing values decline steadily for almost three years now. For example, the Orange County median price in 1990 was $242,400, or 10.2.% higher.

This decline has made it difficult for many to sell their homes without taking a loss or to take advantage of lower interest rates by refinancing their mortgages.

But homeowners can take heart that Orange County prices remain the third highest in the nation--trailing only those in Honolulu and the San Francisco Bay Area.

And housing industry critics argue that the national realty group’s quarterly comparisons, which omit the selling prices of attached homes--including townhomes and condominiums--from the California numbers, artificially inflate Orange County’s prices and any price changes. Attached homes account for about 35% of the Southern California resale market and typically are priced well below detached homes.

When attached home sales are considered, the Orange County median price for the second quarter fell about 5.4%, dropping to $198,400 from $209,700 in the April-June quarter of 1992.

A report prepared by TRW-Redi Property Data in Riverside, which is thought to be more accurate because it uses recorded sales of attached and detached homes, pegs the decline in Orange County’s resale values at just 1.2% in the second quarter. This survey, which uses an average instead of median price, placed the local resale price at an average of $244,835 from $247,765 a year earlier.

But by any measure, area housing prices continue to weaken.

When representing a buyer, Huntington Beach realtor Kirk Kirkland said, he typically suggests an opening bid “10% to 15% below the list price. That’s just where the market is,” except for homes priced at $150,000 and below, which continue to move at list price.

Tustin-area realtor Donna Sutton, president of the East Orange County Assn. of Realtors, said the tumbling price of new housing in much of Orange County also has kept pressure on resale values.

And the situation for new-home developments isn’t much better. The median price of a new detached home in Orange County in the second quarter was $279,900--the lowest price in five years, according to Meyers Group, a Newport Beach real estate consulting firm.

There are a number of new-home projects in Orange County with three- and four-bedroom houses priced below $230,000, which makes it difficult for someone who paid $200,000 for a four-bedroom home a decade ago to make much profit in today’s resale market, realtors say.

Builders have been slashing their prices and offering special incentives to sell their slow-moving houses, which has depressed values of existing homes even further. And it’s worse for recent buyers who find they must sell.

“We just took a new listing from a man who paid $154,000 for a condo in Tustin Ranch just two months ago,” Sutton said. “He has to sell because he has been transferred, but the same models in the new phase of his condo complex are priced $5,000 less than he paid, so he has to sell at a loss.”

The national survey of prices in 132 metropolitan areas showed that houses in smaller cities with less-expensive prices posted the greatest appreciation, while housing prices continued to slip in many costly cities on the coasts.

The pattern upholds economists’ belief that recovery from the recession has been strongest in the Midwest and South and is virtually nonexistent in Southern California.

Nationally, the median resale home price rose 3.8% in the second quarter to $107,000 from $103,100 a year earlier.

Median prices ranged from a high of $358,500 in Honolulu to a low of $50,100 in Waterloo, Iowa.

Times staff writer David W. Myers contributed to this report.

O.C. Home Prices Drop

The percentage decline in home resale prices was greater in Orange County than anywhere else in the nation between April and June. The county’s $219,900 median home price remains the third highest nationally. How Orange County compares: Areas with largest declines Orange County*: -7.6% Los Angeles-Long Beach: -6.6% Hartford, Conn.: -4.9% West Palm Beach-Boca Raton-Delray Beach, Fla.: -4.5% Atlantic City, N.J.: -3.8% +

Top five median home prices

2nd quarter 1992 2nd quarter 1993 Pct. change Honolulu $339,500 $358,500 +5.6% San Francisco Bay area $261,400 $258,400 -1.1% Orange County* $238,000 $219,900 -7.6% Los Angeles-Long Beach $216,600 $202,300 -6.6% Bergen-Passaic, N.J. $188,200 $192,700 +2.4%

* Anaheim-Santa Ana metropolitan statistical area (includes most of Orange County)

Source: National Assn. of Realtors

Researched by JANICE L. JONES / Los Angeles Times