The median price of an Orange County home fell for the fifth year in a row last year to $192,000, while sales grew nearly 19%, an indication that the market is becoming more active but at a significant cost to homeowners.
Analysts said last year's housing market was fueled in part by homeowners who simply grew tired of waiting for prices to rebound and decided to unload homes and condominiums for less than what they paid.
Earlier in the year, a large number of foreclosure properties came onto the market at reduced prices, which helped put a damper on values, analysts said.
A total of 36,494 new and existing homes and condominiums sold last year, the highest number of transactions recorded since 1990, according to Acxiom/DataQuick Information Systems, a La Jolla-based real estate research firm.
A large number of these transactions were condominiums, which came back on the market with a vengeance last year. Condo sales surged, boosting sales in that category 27% to 6,281. But these condominium sales also helped pull prices down, with the median condo selling for $123,000--6% less than it did in 1995.
Realtors and analysts say they hope that a rebounding economy, coupled with stable or declining interest rates, will spur enough home sales this year to stimulate prices. Researchers at Chapman University are predicting that prices will inch up 2.2% this year.
Indeed, the median home price edged up in December 2.6% to $195,000 from $190,000 in 1995. Sales also increased 6.9% to 3,209 from 3,003 in December 1995.
"Prices have bottomed out and people are more secure in their job and future outlook," said Esmael Adibi, director of the Center for Economic Research at Chapman University. "We should slowly begin to see an improvement [in values] next year," he said.
Another encouraging sign that prices could firm up: The number of properties in default, which often are dumped on the market at reduced prices, began dropping late in the year. Last month, 900 homes went into foreclosure, the lowest number since April 1995.
But Realtors and analysts say not to look for a return to the frenzied pace of the late 1980s, when houses sold soon after the for-sale sign went up and people camped out overnight to get a crack at new home communities.
"That was an aberration. I don't think we'll get back to that this side of the turn of the century," said DataQuick analyst John Karevoll.
And that's a good thing, he adds. The market was much less stable then, the quality of homes being built was not as good, and a lot of people could not afford to buy a home in Orange County.
But now, relatively low prices are luring buyers like Paul and Gina Ireland to the market.
Paul Ireland, 33, and his wife Gina, 29, said they decided to take the plunge into home ownership recently because they figured the market had hit bottom. "I didn't feel that the market could get a lot lower," Paul Ireland said.
The newly married couple, who had been renting a condominium in Rancho Santa Margarita, recently purchased a 1,700-square-foot house in nearby Trabuco Canyon for $198,000. The owner, who was in a hurry to sell, paid all the closing costs.
Paul Ireland said he plans to hang onto the home for five to seven years, but said he feels better knowing "there's no chance of losing big money on it in the next couple of years."
Today, real estate agents say more renters like the Irelands are trickling into the market, spurred by lower interest rates and a growing confidence in the economy.
"People have been kind of scared; now they are coming out and testing the water," said Mike Crowley, an agent with Century 21 in Mission Viejo. "Those homes that are in good shape and in good locations are selling."
The biggest reason for analysts' rosy 1997 forecasts is the job growth predicted for the area. More than 27,000 new jobs were created in 1996, and this year another 35,000 jobs could be created, spurring demand for more housing, said Walter Hahn, an analyst with E&Y; Kenneth Leventhal Real Estate Group in Newport Beach.
"It's going to have a strong influence on the housing market," Hahn said. "A lot of those jobs will need people imported to fill them."
Homes also have been selling faster, according to the California Assn. of Realtors. Last year, the typical home in California sold in eight weeks, down from 11.5 weeks in 1995.
The best-selling homes last year were at opposite ends of the housing spectrum in Orange County. Million-dollar estates sold at a brisk pace, as did condos and lower-priced homes for the first-time home buyer, Karevoll said.
In fact, the sales pace picked up first in pricier areas such as Laguna Beach, Dana Point and the inland areas of Trabuco Canyon and Coto de Caza.
Median prices shot up highest in parts of Anaheim, Newport Beach, San Juan Capistrano and San Clemente.
* ON THE RISE: December sales and prices were up across Orange County. D1
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Housing Market Has Mixed Year
Orange County home sales picked up this year, but median prices remained comparatively low. And both measures have a long way to go before regaining levels achieved in pre-recession 1989:
Sales Median Price 1989 51,232 $212,000 1990 39,320 $214,000 1991 29,615 $218,000 1992 26,708 $212,000 1993 30,824 $202,000 1994 36,284 $202,000 1995 30,748 $193,000 1996 36,494 $192,000
1995 vs. 1996
Most of the increase in sales activity from 1995 to 1996 involved existing homes. On the price front, however, new homes increased slightly while resales pulled the overall median price below 1995's level:
SALES MEDIAN PRICE 1996 Change 1996 Change Resale homes 30,021 20.1% $185,000 -0.5% New homes 6,473 6.7% $225,000 2.3% Total 36,494 18.7% $192,000 -0.5%
Note: Both categories include houses and condos.
Largest 1996 Sales Increases
ZIP Code Sales Increase Trabuco Canyon/Coto de Caza 92679 1,377 87.3% Laguna Beach 92651 407 51.9% La Palma 90623 230 42.0% Anaheim 92806 278 41.8% Dana Point 92629 603 40.6%
Largest 1996 Price Increases
ZIP Code Median price Increase Anaheim 92808 $197,500 19.0% Newport Beach 92660 $434,500 14.3% Newport Beach 92662 $510,000 7.8% San Juan Capistrano 92675 $188,750 4.9% San Clemente 92673 $270,000 3.8%