SPRING RUSH: March marks the beginning of...
SPRING RUSH: March marks the beginning of the annual home-buying season, and real estate experts will be watching sales closely this year to see if Orange County’s well-publicized financial problems will affect the market. After four years of decline, home sales improved slightly last year. But, says real estate analyst John Shumway, “Orange County home buyers are in a funk right now. . . .” One bright spot: housing prices have hit a five-year low, says Nima Nattagh of TRW REDI Property Data.
IMAGE PROBLEM: Though Orange County’s bankruptcy has produced talk of a possible sales tax hike, it’s the financial health of the school districts--the main attraction for families--that could affect the housing market. “Some people are waiting to see what happens before they move into some school districts like Irvine,” says Jason Hartman, a real estate agent for ReMax of Irvine. “Some schools could be hard hit.”
FUTURE RATES: Interest rates should stay the same at least for the next six months, Federal Reserve Board Chairman Alan Greenspan told Congress last week. But bankers aren’t sure they can believe him, even though mortgage rates appear to be poised for a small drop. . . . J.B. Crowell, chairman of Eldorado Bank in Tustin, says the industry buzz is that rates--just over 9% for fixed rate mortgages in Southern California--could rise a half a percentage point by May and an additional full point by the end of the year. “If that happens,” he says, “it will hold sales down and make matters worse.”
SLOW GROWTH: A slowdown in home sales will take its toll on Orange County home construction, says economist Walter Hahn of Kenneth Leventhal & Co. in Newport Beach. He projects that builders will put up 1,000 fewer dwellings in the county this year. . . . But with the county’s population still growing and with lower home prices, contractors are “grossly under-supplying the market,” he says. Though sales are slack, he says there is a pent-up demand for 15,000 to 17,000 new houses a year, but only 6,000 are being built.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Housing Slump
As March housing sales go, so goes the season, and neither the month nor the season has done well in the 1990s. March sales: 1988: 4,279 1989: 4,747 1990: 3,591 1991: 2,687 1992: 2,679 1993: 2,159 1994: 3,235 Source: TRW REDI Property Data, Riverside
