Orange County Home Values Up 2.6% in May

In what may be an early sign that Southern California’s housing prices are finally starting to climb, Orange County’s home values in May rose 2.6% from the year before, the biggest jump in nearly two years, according to figures released Thursday, while sales last month increased 53% from May 1995.

Home values, which have dropped about 20% during the last five years of Southern California’s prolonged real estate downturn, have begun to stabilize in recent months. Orange County’s May price jumped 3.1% from the month before as median prices for new and existing homes increased $6,000 to $198,000.

Pent-up consumer demand, loan-rate fluctuations, a boost in consumer confidence and increasing home values are helping to fuel the local housing market comeback, analysts said.

“The California economic upturn has finally reached the real estate market. I hate to use the word ‘recovery,’ but with these numbers, that’s what we’re having,” said John Karevoll, an analyst with DataQuick Information Systems in La Jolla.

“With sales this strong, some of those low-end distressed properties that have helped keep prices down will start getting absorbed,” he said.

A total of 3,865 homes in Orange County were sold last month, the highest number for any single month in nearly six years. A total of 3,885 were sold in August 1990.

Trends in Orange County usually reflect those throughout Southern California. Southland home sales in April soared 40% from a year ago, achieving the highest number of sales in this decade. May sales figures for the rest of Southern California will not be available until later this month.

And, according to the California Assn. of Realtors, a statewide trade group, the unsold statewide inventory figure, a widely watched barometer of housing demand, was at 7.6 months in April, down from 8.4 months in March and significantly lower than the 12.1 months logged for April 1995.

“This low level of inventory suggests continued home price stabilization or increases throughout much of California in coming months, as the more limited supply of available homes is met by strong demand,” said Leslie Appleton-Young, CAR vice president of economics.

In recent years, the California housing market has been one of the state’s last sectors to show signs of recovering.

After falling nearly 19% in Orange County during the downturn of the last five years, home values for resale homes increased 5% to $210,000 last month from the same time last year. Condominium resale figures are still dragging down the county’s median home price.

“May was our best month in four or five years,” said James Joseph, owner of Century 21 in La Mirada. “We’re seeing a lot of fence sitters who finally decided to jump off. Prices and mortgage rates helped drive that. They’ve realized the train is leaving now and they better get on it.”

Increases in loan rates since early this year may have helped drive home sales, brokers said.

The rate on a conforming 30-year fixed-rate mortgage in early April was 7.649% with two points. By early May, rates had increased to 8.113% for a fixed 30-year mortgage and by last week were 8.072%, also with two points.

“There were a lot of people who thought rates were going down, but when rates went up they decided it’s time to buy before things get worse,” said Earl Peattie, publisher of Mortgage News Co. in Santa Ana.

The state of California saw 425,400 homes change hands last year, constituting 11% of home sales nationally. For 1996, the National Assn. of Realtors projects home sales in California will account for 12%, with 462,000 transactions.

“The home sales figures show us that we are witnessing a solid, ongoing recovery in California’s housing market,” CAR President Rick Snyder said.