Home Prices in O.C. Zoom to New High
Orange County’s median home price soared to an all-time high of $241,000 last month, gaining $9,000 in only one month and setting the stage for a blazing summer market.
The new peak eclipsed the previous record, set last June, by $5,000, a real estate research firm reported Wednesday.
The price surge has created a seller’s paradise, but also has spawned rampant sticker shock among buyers, who are showing signs of rebelling against the increases--opting to rent, staying put, or seeking cheaper housing outside the county.
Some corporations are adjusting their hiring strategies, including funds for housing to attract new employees.
With mortgage rates relatively low and the county’s strong economy generating more jobs, analysts say all signs point to continued price gains, as the housing market enters what is traditionally its busiest season of the year.
John Karevoll, who prepared the monthly housing report, predicted that the demand for housing could drive the median price in Orange County as high as $260,000 later this year. The median price means half the houses cost more and half cost less.
“It sounds almost crass because the median is at such an astonishingly high level, but it could still go up quite a bit more,” said Karevoll, with Acxiom/Dataquick Information Systems Inc. of La Jolla.
Karevoll said the report understates the amount of appreciation actually taking place in the market. A better reflection, he said, are median prices according to square feet, which have also reached a new high of $157, up 12% from a year ago.
Others predicted prices will continue to go up but not as rapidly.
Esmail Adibi, an economist at Chapman University, said he sees a median price of $244,000 by the end of the year as the economy settles down a bit.
Home prices in May rose 6.6%, the 24th consecutive month that the market has chalked up gains over the same month a year ago.
Prices for existing homes and condominiums, which account for about 85% of the home sales, climbed to record highs last month. The typical price of an existing home climbed to $262,000, up $10,000 in just one month, while the median price for a condo rose $3,000 to $163,000.
Sales remained brisk but failed to match the frenzied pace of a year ago. Buyers snapped up 4,275 homes last month, compared with 4,507 in May 1998.
But agents warned that the sales pace might be hard to sustain in coming months because home owners have been seeking exorbitant prices when they put their properties on the market in an effort to cash in on the surge.
Patrick Knapp at ReMax Real Estate Services in Newport Beach said he routinely sees homes coming onto the market that are 10% or more above comparable sales prices. Now, potential buyers are beginning to balk at those premiums, he said.
“We’re finding more sellers out there,” Knapp said. “But I’m seeing the number of homes stacking up somewhat.
“People seem to have gotten caught up in the market’s hype. It’s rebounding so quickly that they’re putting it out there at ridiculous prices and getting it.”
Recently, he said, he took over a listing for a home that had languished on the market at $425,000. He suggested the seller cut the price to $399,000. Within days, the home drew two offers.
Another agent, Chuck Bucimi, of First Team Realty, also said more buyers are unwilling to pay premium prices.
“I’ve worked with several buyers who have seen properties that are quite a bit more every time they go out and they’re beginning to wonder,” he said. “But we’re still a long ways from where they won’t buy.”
There’s still a shortage of homes on the market, analysts noted. Currently, there is about a three-month housing inventory, which isn’t enough to prevent prices from moving up, said Patrick Veling, who heads Dynamic Marketing Resources Inc. in Fullerton. A backlog of 5 1/2 to seven months is normal.
He noted, however, that new homes coming onto the market will help mitigate price spikes later this year. More than 2,000 new homes in planned communities in South Orange County are expected to go on the market this summer.
Potential buyers have been showing up in droves at new projects, builders said. Brookfield Homes expected 400 people to show up last weekend for a tour of homes under construction in the $400,000 to $500,000 price range on Ladera Ranch. Despite little promotion, about 900 people showed up, said Jeffrey Prostor, who heads up Brookfield Homes in Orange County.
At a new townhome project in Anaheim Hills, potential buyers camped out overnight to view new condominiums priced from $150,000 to $190,000. “The demand is huge,” said Jeff Carter, a sales representative at the 273-unit project, The Collection at Summit Park.
But homes in that price range have been in short supply in Orange County. Increasingly, agents have been showing homes in Riverside County to buyers who cannot afford places in Orange County, said Alicia Parker, who owns Hacienda Realty in Santa Ana.
The market is a boon for many sellers, however.
Erin and Brent Giudice, who sold their Aliso Viejo home in late May for a six-figure profit, were happy they found willing buyers who snapped up their home in less than 40 days after it was listed. The extra money will allow them to put a 20% down payment on a new Irvine home worth more than $500,000.
The couple began looking at previously owned homes, but considering that many needed new roofs, new plumbing or more, those places seemed overpriced, Erin Giudice said. She figures her family moved just in time into a new home, where prices already have moved up between phases. Now, a similarly equipped home costs $70,000 more, she said.
She said selling when they did was the right decision.
“If the economy were slower, it would have taken a lot longer to sell that home and we may not have had enough money for a new home,” she said.
* PRICE RUNDOWN: A complete list of May O.C. home sales and median prices by ZIP Code. C1
* STICKER SHOCK: Soaring home prices force those relocating to Orange County to settle for less. C1
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Home-Price Highs
The five highest monthly median home sale prices in Orange County have all occurred during the last 12 months:
May 1999: 241,000
June & Dec. 1998: 236,000
March 1999: 232,000
April 1999: 231,000
Aug. & Oct. 1998: 230,000
Source: Acxiom/Dataquick; Researched by JANICE JONES DODDS
Orange County Home Sales
The median home sale price hit an all-time high in May. The $241,000 shattered by $5,000 the previous top, reached in June and December, 1998. May sales slumped 5% from one year ago, to a total of 4,275. See story, A1. Sales, median price and median price per square foot for new and resale homes and condominiums, by ZIP codes:
Source: Acxiom/DataQuick Information Systems; Researched by JANICE JONES DODDS / Los Angeles Times
