Median Home Price in O.C. Hits Record High
Orange County’s median home price surged to an all-time high of $226,000 in May, surpassing even the pre-recession peak, as sales posted their second-busiest month of the decade.
In the latest indication that the housing market has recovered from the early 1990s downturn, the typical house gained $29,000 in value in the last year, Acxiom/DataQuick’s housing market survey showed Monday.
May’s median price eclipsed the previous record of $223,000 set in June 1991 and is 14.7% higher than a year ago.
“Orange County is back,” said John Karevoll, who compiled the numbers for DataQuick. “All the declines from the recession are over.”
Barring some unforeseen bad economic news, home prices are expected to continue to rise into the fall, he said.
Spurred by a robust economy, low mortgage rates and sustained job growth, 4,507 homes were sold during May. That’s down 2% from April’s record 4,589 sales, but 25% higher from a year ago.
“With the continued economic expansion, people feel secure about their jobs and they’re coming out and buying homes,” said Esmael Adibi, director of Anderson Center for Economic Research at Chapman University.
For sellers, the market may never have been stronger.
In South County, agents say some homes are selling above appraised values, some eager buyers are offering more than the asking price, and some backup offers are coming in even higher.
Mary and Brendan Slagle got lucky all the way around.
The couple was able to buy a home in Dana Point that they thought was out of their price range until the seller--who was trying to keep another real estate deal afloat--whacked about $25,000 off the price.
Meanwhile, the Slagles home was snapped up for just more than the asking price and had a backup offer for $5,000 more.
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But for potential buyers, soaring home prices are a nightmare come true.
Newport Beach renter Rhonda Roy’s house-hunting search has been fruitless. The 35-year-old single mother of three bid on a Seal Beach house last month, but the seller backed out of the deal. She also was left in the lurch when a Newport Beach seller had second thoughts on Monday.
Roy has a backup offer on another Newport Beach home, which already has a full-price offer ahead of hers. While she’s waiting, Roy said her real estate agent may distribute fliers in the Newport Coast area to see if anybody is willing to sell.
“Basically, there’s no negotiating,” Roy said. “The seller gets whatever they want and then they decide if they want to sell it or not. And all I want to do is move.”
Buyers like Roy can expect to see higher prices in the months ahead because the cost of ownership in Orange County is declining, Karevoll said.
A buyer making a 20% down payment on a $226,000 home at 6.75% for 30 years will have a monthly mortgage payment of about $1,200. That compares to $1,535 in 1991 during the last recession, and $1,657 in 1989, when the market was peaking and interest rates were higher.
The healthy job market and income level “sets the stage for a continued rise in prices and strong sales activity through the fall,” Karevoll said, adding that only a significant rise in interest rates would alter his forecast.
The sales surge in Orange County, a trendsetter in Southern California’s housing market, is benefiting thousands of homeowners who bought at the peak of the last real estate cycle.
Although prices dropped 16% or more, they appear to be surpassing pre-recession levels in many parts of the region this summer, something that already has occurred in the Bay Area and in San Diego County.
While there are pockets that haven’t seen double-digit appreciation rates, Acxiom/DataQuick’s figures show that overall, a majority of homeowners have regained what was lost during the early ‘90s recession.
But the market still has a ways to go before all of the losses incurred in the recession are erased, Adibi said. He notes that a 7.5% price increase this year, on top of last year’s 1.5% gain, will recoup only about 60% of the price erosion from the early ‘90s.
Unlike the housing boom of the late 1980s, affordability has not yet become a key factor in whether people buy houses, analysts said. Despite price increases, key indicators have yet to show that prices are beyond the reach of buyers.
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One measure of affordability is the number of buyers using adjustable-rate mortgages, commonly used by those stretching financially to buy a home. Adjustable-rate loans were used in only 15.3% of home purchases in May, an all-time low, Karevoll said.
May’s price surge helped elevate prices across the county.
In pockets of Newport Beach where sales had lagged for years, homes are now selling briskly, said Bev White of Prudential California Realty.
“There are so many buyers and such a lack of inventory that homes are now selling before they hit the market or as soon as they hit the market,” she said. “Now, there’s nothing for sale unless it is grossly overpriced--and those homes are beginning to sell too.
“I’ve been in this business 25 years and I’ve never seen anything like this.”
* BY THE NUMBERS
How the county’s housing sales measured up by ZIP Codes. D1
Hot Market
The median sales prices for a home in Orange County hit a record $226,000 in May. That surpassed the old high $223,000 set in June 1991, Here’s what happened to median prices between those two months: $226,000, May ’98
Sales, Price Trends
Monthly Sales: 4,507
Median Price: $226,000
May Sales: 4,507
May Median Prices: $226,000
Source: Axciom/DataQuick; Researched by JANICE JONES DODDS /Los Angeles Times
