O.C. Home Prices Jump in Rebounding Market
Prices on new homes surged more than 17% last month in Orange County, propelling overall home prices to one of their largest gains so far this year, a data firm reported Monday.
The rising prices, coupled with a 7.2% gain in home sales, provided further signs that the county’s housing market is continuing to recover this year, said John Karevoll, an analyst with DataQuick Information Systems in La Jolla.
“We’re in a more normal market right now,” Karevoll said. “It’s a good market.”
In August, Orange County’s overall median home price increased 3.2% to $196,000 while the median price for new homes climbed 17.2% to $245,000 from $209,000 for the same month last year.
Sales also increased, but not as much as in previous months. A total of 3,390 homes closed in August compared to 3,162 homes sold during August 1995.
Increasing consumer confidence, more sales of mid-priced homes and improving economic conditions are helping to drive the market, Karevoll said.
The price increases also are being fueled by a growing number of homeowners buying more expensive homes, real estate executives said.
“The move-up market is really strong and that’s helping to drive up new home prices,” said Tom Martin, vice president of sales for Lennar Homes of California, which owns Coto de Caza, a large master-planned community in South County. “If the home is well-designed and lot size is good, it compels them to buy and move up.”
The Southern California real estate market has been improving throughout the year, with sales during the second quarter the strongest in five years. Orange County’s market posted very strong year-to-year gains at the beginning of the year, but sales gains have slowed in recent months.
The 7.2% gain in August was the smallest year-to-year increase so far this year, DataQuick said. The sales pace earlier this year seemed exceptionally strong, in part, because of the comparison to the early months of 1995 when sales were very sluggish.
Higher interest rates are helping to keep a lid on sales, said Walter Hahn with E&Y; Kenneth Laventhal Real Estate Group in Newport Beach.
“Everything is good, the economy and job market are improving, but interest rates have depressed things a bit from where they otherwise would have been,” Hahn said.
The rate on a 30-year, fixed-rate mortgage in late August was 8.18% with two points, up from 7.89% during the first week in August, according to Mortgage News Co. in Santa Ana.
“Sometimes a spike gets them off the fence and sometimes it keeps them at home,” said Earl Peattie, president of Mortgage News.
More buyers, concerned that rates might go up, were flocking to Boardwalk, a new Presley Homes project in Huntington Beach, said Mandy Murar, a Presley sales representative. They crowded into a sales office one hot Sunday last month, she said.
“It was a busy month. Traffic might have been a little slower than earlier this year, but the quality of buyers was good,” Murar said. “They were more ready, willing and able to purchase.”
While some real estate agents said the market had improved in August, others such as Shiva Omni with Century 21 in Irvine said hot weather kept some buyers at home. “August was not so good for us,” said Omni. “The market was slower than usual.”
In another sign that the state’s housing market has improved, fewer California homeowners are taking losses when they sell their homes, according to another DataQuick report. In July, 27.9% of the sellers sold their homes for less than they had paid for them, down from 28.4% in June and 31.3% in July a year ago, the company reported.
Still, the situation in Orange County was grimmer. About 43% of the owners were forced to take a loss when they sold their homes, a ratio equaled only by Ventura County, DataQuick found.
The lowest loss ratios can be found in areas where prices are increasing or where housing stock is older and owners have lived in homes longer, Cohn said.
Home prices in Santa Clara County are going up at the fastest rate in the state, and the county has the state’s lowest loss rate, 13%. In San Francisco, only 13.6% of all sellers take a loss.
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Housing Hassles
Nearly one-fourth of the county’s 1,093 foreclosures in August took place in six ZIP Codes. Areas with the most foreclosures:
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Community ZIP Foreclosures Santa Ana 92704 58 Lake Forest 92630 40 Rancho Santa Margarita 92688 39 Laguna Hills 92653 37 Laguna Niguel 92677 37 Santa Ana 92707 36
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Source: DataQuick Information Systems
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Sales, Price Trends
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Sales Median price Aug. 1995 3,162 $190,000 Sept. 2,803 $193,000 Oct. 2,762 $189,000 Nov. 2,669 $195,000 Dec. 3,003 $190,000 Jan., 1996 2,093 $186,000 Feb. 2,359 $189,000 March 3,060 $187,000 April 3,411 $192,000 May 3,865 $198,000 June 3,461 $196,000 July 2,983 $193,000 Aug. 3,390 $196,000 Aug. 1992 1,886 $220,000 Aug. 1993 2,748 $200,000 Aug. 1994 3,270 $208,000 Aug. 1995 3,162 $190,000 Aug. 1996 3,390 $196,000
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