Shrinking Supply Lifts Prices of O.C. Homes
Orange County’s median home price surpassed $200,000 last month for the first time in three years, buoyed by brisk sales and a shrinking supply of homes on the market, a real estate data firm reported Monday.
Home sales in June rose 5.8% to 3,726, making it the second busiest month since 1990, according to Acxiom/DataQuick.
The county’s robust economy is fueling renewed confidence in the housing market, said Barbara Amstadter, an agent with Ellis Realty Group in Newport Beach.
“There is a now a sense of urgency,” she said. More choice properties are receiving multiple offers, and homes in general are selling more rapidly, she noted.
These factors combined to push median prices up 2% to $201,000 in June, capping a strong six-month price surge. Prices have gone up 8% since January, adding $16,000 to the value of the average Orange County home.
The biggest increases were for new and existing homes. The median price for new homes climbed 6.4% to $233,000, while existing homes, the biggest segment of the market, climbed 4.4% to $215,000.
Only the condominium market, which dipped 1.5% to $128,000, prevented overall prices from going up more in June, according to DataQuick.
“We’re starting to regain some of the ground we lost in values during the recession,” DataQuick analyst John Karevoll said.
Analysts say the housing market, which began to bounce back in earnest earlier this year from a prolonged slump, should continue to pick up momentum, especially if interest rates remain low.
Since the end of May, the average 30-year fixed-rate mortgage has dropped from 7.8% to as low as 7.32%, according to Morro Bay-based Mortgage News Co.
Lower interest rates helped convince Kelly Dinh, 24, of Santa Ana to take the home-buying plunge with her sister Angie, 28. The pair, who had been living with their brother, recently purchased a four-bedroom house with a pool just one block away in the Sandpointe community.
“The interest rates have gone down and the prices had decreased,” Kelly Dinh said. “We wanted to move before the prices went up.”
The 2,300-square-foot house Dinh chose was listed five years ago at $280,000, then dropped to $260,000 and $225,000 before she picked it up for $219,000 in June.
“I really feel like I got a good deal,” she said.
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Although prices are now starting to rise, many sellers are still holding back from listing their homes, figuring they can reap more from a sale when the market bounces back further, Realtors said. This wait-and-see attitude--combined with the increasing demand--had dropped the available supply of housing in the county to 4.5 months as of April, according to Fullerton-based Dynamic Marketing Resources. This means that the current supply of resale houses could be exhausted in 4 1/2 months if no other houses were listed and the demand continued at the same pace.
“If it’s priced well it will sell in 30 days or less,” said Jean Yeck, a Coldwell Banker agent in Laguna Niguel. “A year ago that wouldn’t have been true.”
Sales of detached resale homes increased 11.1% to 2,506 in June from 2,256 last year and 2,400 in May. Sales of resale condos surged a whopping 27.5% to 715 last month from 561 last year as buyers flooded the market looking for bargains.
But if buyers are looking for bargain-basement prices, they should have bought at the beginning of the year when the median home price dropped to $185,000--its lowest point in about nine years.
Since then, median prices have increased 8%, largely on the strength of higher-end home sales. These price hikes have prompted some buyers recently in Newport Beach to buy houses on speculation with the idea of reselling them quickly for a profit.
Home builders too have begun raising prices as weekend crowds have increased at their sales models.
At San Marcos, a community in Tustin Ranch with homes costing more than $400,000, prices have increased about 3% this year, mainly because the number of competitors in the area has decreased.
“Demand has increased and there are not very many homes to look at in this area in this price category,” said Rich Mraule, sales manager.
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Driving Force
New home prices, 6.4% higher than last June, led overall price increases. Median new home prices:
June 1996: $219,000
June 1997: 233,000
Source: Acxiom/DataQuick
For listings by city, see D1.
