Median Price for O.C. Homes Surges 10.5%

By E. SCOTT RECKARD

Dec. 10, 1997 12 AM PT

TIMES STAFF WRITER

Orange County housing prices recorded another sharp gain last month, helping lead a real estate recovery that now extends to every Southern California county, new surveys show.

The median price for Orange County homes last month rose to $210,000, the highest since December 1992, according to Acxiom/

DataQuick Information Services, which tracks real estate data.

The median price was up slightly from $208,000 the previous month, and 10.5% higher than a year ago. Home sales totaled 3,166, up 12% from a year earlier but down from the steaming pace in October, when 4,173 homes were sold.

With the county’s unemployment rate in the 3% range, interest rates low and consumer confidence high, pent-up demand for homes is being released after years of slumping markets, economists said.

“As long as we don’t hit an economic downturn, which we aren’t forecasting, I don’t think prices are going to go down,” said Steve Cauley, an economist with the UCLA Business Forecasting Project.

DataQuick researcher John Karevoll cautioned that the median--the price at which half of the homes sold for more and half for less--was skewed upward by two factors.

First, a larger portion of new home sales this November were in the luxury category, pulling the median higher, he said. Second, unusually high numbers of condos were unloaded by their owners at losses in November 1996, depressing the median price for the earlier period.

Despite those statistical oddities, prices clearly are moving upward in the county and throughout the region, economists said.

A closely watched survey to be released today found that home prices in October increased in every county from San Diego to Santa Barbara for the first time in 7 1/2 years.

The year-to-year gains ranged from more than 12% on the Westside of Los Angeles to about 1% in many Inland Empire areas, according to the semi-annual survey by the Real Estate Research Council of Southern California.

Orange County was one of the leaders of the trend, with prices up an average of 3.1% from a year earlier, according to the study, which is conducted by reappraising the value of the same homes every six months.

Not since April 1990 had the study showed prices in all seven counties rising simultaneously, said Michael Carney, the Cal Poly Pomona professor who supervises the research.

“The recovery is now firmly in place nearly everywhere in Southern California,” Carney said.

He said prices should continue to go up in the wake of falling unemployment and rising consumer confidence. Even areas with lagging prices, such as the Antelope Valley, should begin to show gains in six months to a year, he added.

The local housing market’s increased momentum is still modest compared with the San Francisco Bay Area, which is beginning to resemble the frenzied market in the late 1980s. Prices in the Bay Area have gone up about 10% overall in the last year and by about 16% in the Silicon Valley, Carney noted.

Carney said he expects Southern California prices to rise more slowly, near the rate of inflation. While San Francisco-area prices are at or above historical highs, Orange County prices in October were still 15% lower than at their peaks in 1990, he said.

Some brokers say demand for homes in Orange County is so strong that their biggest problem is getting listings. To entice homeowners to try “trading up” to better homes, they are encouraging them to offer their houses for sale with contingencies that would have been unheard of a year or two ago.

For several months, First Team Real Estate agents have been advising homeowners to sell their houses on condition that they can cancel the deals if they can’t find new residences to their liking.

“Now that’s unusual, but in this market we have buyers who want the house bad enough to give you a chance to go look for another one,” said William Plattos, First Team’s general manager.

First Team put about $150 million worth of homes into escrow in November, up from $89 million in November 1996. “I’m looking for December to double,” Plattos said. “We had $60 million in [December] 1996, and I’m looking for well above $100 million this year.”

Plattos said the hottest areas include coastal cities and certain South County neighborhoods such as Bear Brand Ranch in Laguna Niguel.

In another sign of a turnaround, the number of Orange County homeowners defaulting on their mortgages declined sharply in November. Defaults totaled 492, Karevoll said, down from 746 in October and 912 in November 1996.

Experts say homeowners are far less likely to default on loans if they believe home prices are rising.

* BY THE NUMBERS: Change in median sales price as well as volume in Orange County, city by city. D1

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Rose-Tinted Windows

Southern California’s housing market is clearly on the mend. Prices are advancing, according to a survey that tracks the value of specific homes over a period of years:

County: Change from Oct. 1996

Los Angeles: 3.2%

Orange: 3.1%

Riverside: 1.0%

San Bernardino: 0.2%

San Diego: 2.6%

Santa Barbara: 3.3%

Ventura: 1.4%

Seven-county area: 2.5%

Orange County Home-Price Change

Average annual percentage change in Orange County home prices, October 1993 to October 1997:

1997