O.C.'s Housing Market Builds Toward a Boom

By E. SCOTT RECKARD

Jan. 13, 1998 12 AM PT

TIMES STAFF WRITER

Orange County home sales and prices surged in December--usually a slow month--capping a solid year of recovery for the housing industry, according to figures released Monday.

The median home price rocketed up 10.3% from a year earlier, to $215,000, adding $20,000 to the typical sales price.

For the year, Orange County home sales jumped by 14.4% to 41,739, the highest volume since 1990, reported Acxiom/DataQuick Information Services, which tracks real estate sales.

Analysts said the year started sluggishly, but along the way, key local and national trends converged to jump-start sales and prices.

A robust economy generated thousands of jobs. Mortgage rates were the lowest in years. The surging stock market created more wealth.

Even the San Joaquin Hills toll road helped, making it easier for commuters to reach South County homes--and driving up their prices sharply.

In the end, it all calmed the fears that had kept many baby boom homeowners from trading up to bigger, more expensive homes, unleashing a burst of demand that became a huge bang by the year’s end.

“It’s a very strong market right now,” said DataQuick analyst John Karevoll.

The median price for the year was up 4.2% at $200,000, “but that understates the current strength of the market,” Karevoll said.

He said Orange County now is starting to resemble the ultra-hot Silicon Valley market. In December, typically the sixth-busiest month of the year for home sales, Orange County recorded its second-highest sales volume of any month in the 1990s.

Overall, home prices were at their highest level since September 1992, with new homes leading the way.

The median new-home price zoomed 19.3% to $284,000, the highest ever recorded.

A scarcity of ready-to-build lots in Orange County is helping drive up new-home prices, said Bob McFarland, senior vice president of Market Profiles, which tracks residential trends.

“When the consumer confidence is back and there’s a shortage of homes, too, you’ve really got a supply-and-demand process starting, and then prices start to go up,” said McFarland.

In more good news for sellers, it takes a lot less time to unload their houses now. In early 1993, the average Orange County home was on the market more than 100 days. Now, homes are selling in less than 50 days, according to the California Assn. of Realtors.

The last extended period when homes were selling so quickly was in 1989, said G.U. Krueger, an economist with the real estate association.

The real estate rebound was reflected across most of Southern California.

Using data from all but the last 3 1/2 days of 1997, Karevoll projected total Los Angeles County house and condo sales at 94,623 last year, up 9.3% from 1996 and also the highest number since 1990. For the year, the median Los Angeles County price rose 4.9% to $170,000.

“The move-up market and the luxury market have clearly rebounded, and it is not an aberration. We’ve been seeing the upturn for a solid year now,” said Edward Zinke, vice president of sales for Braemar Group of Agoura Hills.

Braemar, a builder of high-end homes, diversified into less expensive work during the real estate recession, including a redevelopment project in Pico Rivera. But its next two projects will feature million-dollar homes in Calabasas and Tarzana.

In areas where workers in the entertainment and high-tech industries live, sales and price increases were especially strong.

“I’ve got four homes in escrow right now, which is amazing,” said Deirdre Daniels, regional director for the Fred Sands Estate Division in Brentwood. “Because usually in January, everybody goes skiing.”

Many new home builders also are celebrating the new year.

Lewis Homes, an Upland-based builder with moderately priced projects throughout Southern California, recorded strong sales during the New Year’s holiday, a normally dead period, said Randall Lewis, the company’s marketing director.

At a Lewis project in La Verne, for example, about a home a week had been selling, but three sold over the New Year’s weekend, Lewis said.

“People think that the market prices have bottomed out. And they think mortgage rates are amazing,” he said.

Cary Bren, chief executive of Orange County’s California Pacific Homes, also reported good sales during what’s usually a slow time and said “the indicators are there” for a strong 1998.

“Historically, we see more [sales] after the Super Bowl weekend, and December is slow. But this December was a good month. We sold 28 [homes] for the month,” Bren said.

Despite the recovery, prices in most Southern California neighborhoods remain far below their peaks of eight years ago, and lower-priced areas tended to show lower increases.

“We’re not seeing appreciation where the bulk of the population lives,” said Huntington Beach broker Pat Neal. “And the middle-range homes have a long way to go still to get back to where they were in 1990.”

As an example, she cited Garden Grove’s middle-class Garden Park area, where the median home price is now $194,000--still nearly 20% below the peak of about $240,000.

Nevertheless, the overall trends are positive, said Chapman University’s president, economist James L. Doti.

In a report to the Building Industry Assn. of Orange County, Doti said Monday that high population growth in the West, combined with the strong local economy, will keep up the pressure on Orange County real estate well into the coming millennium.

He projected that 14,700 housing units will be built in Orange County this year, up from 12,100 last year, with construction rising to 20,800 units by 2002.

Despite the recent home price increases, falling interest rates and rising incomes likely will keep demand high for housing in the county, Doti said in an interview.

In a December economic forecast for the county, he had projected home price increases of 4% for 1998, but he said he may have to revise that figure.

“I wouldn’t at all be surprised to see home price appreciation of 6% to 7% this year,” Doti said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

The Year of Recovery

Orange County home sales and median prices made a comeback in 1997 after years of decline. Aided by some of the lowest interest rates in a decade, homes spent the shortest time on the market since 1988:

*--*

Sales Median price 1988 57,182 $184,750 1989 51,232 $212,750 1990 41,930 $214,000 1991 31,741 $218,000 1992 28,389 $212,000 1993 31,830 $202,000 1994 36,284 $202,000 1995 30,748 $193,000 1996 36,494 $192,000 1997 41,739 $200,000

*--*

Note: Sales and prices are for new and existing homes and condominiums

Rate Watch

December nationwide average rate, 30-year fixed mortgages:

1988: 10.72%

1989: 9.86%

1990: 9.75%

1991: 8.60%

1992: 8.36%

1993: 7.30%

1994: 9.35%

1995: 7.47%