Home Sales Slump Persists in O.C.; 28% Drop in May : Real estate: Sluggish economy is blamed for seventh consecutive monthly decline. Lower long-term interest rates may spur activity.
The bad weather may be gone, but the sluggish economy continues to hold buyers of Orange County homes at bay as sales last month dropped 28% from May of last year.
The poor sales month is the seventh consecutive monthly decline, according to TRW-REDI Property Data Services Inc., and marks the lowest number of homes sold in May since the real estate market research firm began tracking transactions in 1988.
Sales over the first five months this year fell 30% from sales during the same period last year, though unusually rainy weather and high interest rates at the beginning of the year, along with the county’s bankruptcy, caused much of the sales shrinkage.
There were few surprises or encouraging signs in the sale of 2,414 single-family homes and condominiums in May, said Nima Nattagh, TRW-REDI’s research analyst. The average price of the homes was $237,813, down 1.3% from a year earlier.
“This is part of a pattern we’ve seen for a while now,” Nattagh said. “And I don’t think it’s a pattern that bodes well for the market in Orange County.”
Analysts said low consumer confidence--fueled by the slow economy, the bankruptcy, the higher rates and the bad weather--was a key cause for the drop in home sales.
The state of mind is nearly as important as finances when it comes to purchasing a home, said Anil Puri, head of Cal State Fullerton’s economics department.
“There are psychological factors, such as the [county] bankruptcy,” Puri said. “It may not have a real impact on a lot of people--except those people who lost their jobs--but psychologically, it becomes one more reason not to buy a house.”
Nattagh said a recent decline in long-term interest rates combined with the start of the home-buying season may spur sales in the weeks to come and could be reflected in June’s home sales figures. The rate for a fixed-rate, 30-year mortgage has hovered just above 8% for the last two months after hitting a high of 9.2% in December.
Some realtors say they already are seeing a slight turnaround.
Jason Hartman with Re/Max Realtors in Irvine said the past week has given his business a shot in the arm. He said he sold three homes and received offers on three others, a total far more encouraging than the four sales a month he has averaged so far this year.
“I’m glad to see it,” said Hartman, who averaged six home sales a month last year. “It’s been a pretty meager year. But the market seems to be picking up and I think you can credit the interest rates.”
Coldwell Banker offices in Mission Viejo, Tustin and Laguna Beach also have enjoyed a surge in business in the past 10 days, said George Musulli, the company’s regional senior vice president.
“I’ve seen it firsthand,” Musulli said. “It’s been like a ray of sunshine. There’s been more interest in open houses, more buyers, more activity in general. And it makes sense. It’s a good time to buy, a buyer’s market.”
Attractive interest rates are just part of the picture, Musulli said. Prospective buyers also may have been waiting to gauge the fallout of the county bankruptcy, and now are more confident that the county is still a safe spot for a homestead.
“I’m not minimizing the Orange County bankruptcy, but it may not be playing as major a role as some people thought it might,” he said. “The county and the state are very resilient, and I think people know now that the county will make it through this.”
Nattagh said there is little data to suggest that the county’s bond investment debacle and December bankruptcy filing have contributed to the home sales slump.
“If that were true, we shouldn’t have seen a drop-off in the other counties around the state,” he said. “Orange County would have stood out, and that hasn’t been the case. San Diego, for example, has been doing very badly too. I think the cause is a more fundamental weakness in the market.”
Sales of existing homes have been hit harder than new homes sales, a trend Nattagh said could be caused by a variety of factors.
Reselling homes has been tougher, he said, because buyers who paid peak prices in the late 1980s find it difficult to sell without taking a loss. Instead, they refuse to sell as they wait for values to rise again.
In addition, they can’t compete with the incentives new home builders can offer, he said. And they face selling their homes at a time when builders are turning to the construction of affordable housing, he said, “which has made it more accommodating to buyers on the lower end of the market.”
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Orange County Home Sales
Sales of new and existing homes dropped 28% in May compared to the same month last year. The average sales price dropped 1.3% during the same period.
MAY 1994 MAY 1995 ZIP Sales Avg. price Sales Avg. price Aliso Viejo 92656 120 199,631 88 196,580 Anaheim 92800 2 206,750 2 119,000 Anaheim 92801 36 166,986 20 157,775 Anaheim 92802 28 162,339 21 164,714 Anaheim 92804 52 174,671 38 164,514 Anaheim 92805 27 157,444 37 150,569 Anaheim 92806 24 182,917 14 189,464 Anaheim Hills 92807 64 262,789 37 235,643 Anaheim Hills 92808 46 251,756 24 230,045 Balboa 92661 6 1,180,333 3 643,333 Balboa Island 92662 3 1,077,333 5 767,000 Brea 92621 47 217,935 21 210,262 Buena Park 90620 34 174,412 37 167,581 Buena Park 90621 20 228,050 18 155,000 Capistrano Beach 92624 9 309,000 15 253,214 Corona del Mar 92625 21 530,405 10 475,250 Costa Mesa 92626 34 228,103 23 240,456 Costa Mesa 92627 56 231,545 25 260,180 Cypress 90630 37 222,770 32 211,813 Dana Point 92629 65 192,347 28 214,722 El Toro Marine Base 92709 8 179,375 4 261,875 Foothill Ranch/L.Forest 92610 51 261,265 13 249,346 Fountain Valley 92708 69 231,687 40 210,946 Fullerton 92631 16 245,594 20 233,000 Fullerton 92632 15 160,071 12 152,250 Fullerton 92633 51 189,677 32 209,183 Fullerton 92635 24 272,000 28 250,907 Garden Grove 92640 37 160,751 25 149,500 Garden Grove 92641 27 167,185 13 165,308 Garden Grove 92643 28 163,500 19 152,421 Garden Grove 92644 20 167,316 9 163,333 Garden Grove 92645 23 194,891 11 216,800 Huntington Beach 92646 69 248,808 34 248,397 Huntington Beach 92647 52 211,120 33 216,435 Huntington Beach 92648 75 287,375 55 319,704 Huntington Beach 92649 46 350,360 26 316,883 Irvine 92714 120 219,248 95 232,423 Irvine 92715 32 312,111 29 401,569 Irvine 92720 30 247,972 20 271,875 La Habra 90631 59 198,946 44 195,550 La Palma 90623 21 233,525 14 214,417 Laguna Beach 92651 29 435,411 38 477,500 Laguna Hills 92653 107 223,438 88 213,184 Laguna Niguel/L. Beach 92677 136 291,584 111 316,768 Lake Forest 92630 85 213,283 53 206,808 Los Alamitos/Rossmoor 90720 13 294,231 17 286,441 Midway City 92655 6 152,167 4 106,000 Mission Viejo 92690 1 253,500 0 -- Mission Viejo 92691 97 202,053 72 207,718 Mission Viejo 92692 141 232,638 73 249,894 Newport Coast/Ridge 92657 16 323,719 27 320,648 Newport Beach 92660 54 558,906 24 460,250 Newport Beach 92663 42 391,295 21 447,237 Orange 92665 28 178,000 10 211,889 Orange 92666 12 205,364 7 195,500 Orange 92667 62 306,266 51 275,837 Orange 92668 16 158,531 11 140,136 Orange 92669 41 225,310 34 232,353 Placentia 92670 51 218,500 46 246,989 Portola/Trabuco/Coto 92679 80 289,169 38 360,803 Rancho Santa Margarita 92688 59 213,170 75 192,351 San Clemente 92672 75 250,187 71 235,107 San Clemente 92673 6 299,000 6 279,667 San Juan Capistrano 92675 60 250,381 33 216,081 Santa Ana 92701 36 147,029 32 141,242 Santa Ana 92703 33 140,422 28 129,339 Santa Ana 92704 57 173,491 38 152,684 Santa Ana/Cowan Hgts. 92705 27 376,313 31 324,052 Santa Ana 92706 24 179,333 16 166,871 Santa Ana/S.A. Hgts. 92707 44 143,456 39 133,769 Seal Beach 90740 16 357,531 9 304,722 Silverado Canyon 92676 2 142,250 1 122,000 Stanton 90680 20 152,368 19 133,842 Trabuco Canyon 92678 4 198,625 1 202,000 Tustin 92680 103 205,201 71 232,993 Westminster 92683 60 194,592 56 179,031 Yorba Linda 92686 89 296,099 59 269,789 Yorba Linda 92687 16 313,531 20 291,525 Others -- 5 -- 10 -- County total 3,357 240,899 2,414 237,813
Source: TRW REDI Property Data; Researched by JANICE L. JONES / Los Angeles Times
