O.C. BUSINESS PLUS : O.C. New-Home Prices Still Soaring : Real estate: New houses are 4.5% costlier than a year ago, with last quarter’s median at $371,990, study says.
The median price of a new house in Orange County rose to $371,990 in the third quarter, a 4.5% increase over a year ago, according to a leading real estate research firm.
The increase came although sales dropped 15.5% to 1,510 in the three months ended Sept. 15, a period when rates rose significantly, said the Meyers Group, an Irvine-based company that tracks new home projects nationwide.
Although up from a year ago, the median price--meaning that half of the homes sold for more, half for less--is down from the all-time high of $379,990 in the April-June period.
Prices per square foot--considered a truer measure of market appreciation--rose 7%, to $159, for houses and more than 3%, to $151, for attached homes. Those are the highest square-foot values recorded since Meyers began monitoring new-home sales in 1988.
“We’ve reached a point where buyers are starting to be more cautious about purchasing at the peak of the market,” said Lorry Lynn, the Meyers analyst who conducted the study. “I think that explains why we are seeing tremendous demand in the marketplace, and why sales and prices are flattening a little bit.”
New homes priced under $350,000 represent less than a third of all homes being built, down from 40% during the same period a year ago. With a 10% down payment, buyers would have to earn roughly $96,000 a year to afford those homes, Lynn added.
But a large portion of new jobs generated in Orange County pay between $30,000 and $40,000. That salary supports about $1,000 a month in home payments, Lynn said, whereas a typical new home in Orange County requires a monthly payment of $1,730, assuming a 20% down payment.
In the last two years, the median price of a new house has risen by $95,590 and currently stands 140% above the U.S. median of $155,000. Demand for new homes is expected to boost prices steadily because of the strong economy, but not at the double-digit rates seen in recent quarters, the report said.
The study also noted that prices of new condominiums rose faster than new-house prices. Condo prices increased 10% from the same period a year ago, to $193,990.
The increase stemmed from construction of upscale units along the Orange County coast and the huge price gap between condos and detached homes, which allowed condo builders to raise prices, Lynn said.
With the Orange County market considered under-built, developers have been trying to complete more homes. A record number of 40 new projects were launched in the July-September period, mostly in master-planned communities in south Orange County. As a result, the supply of new homes swelled to 12 weeks, a historically low figure but more than double the five-week supply of a year ago.
With more homes to choose from, buyers may sense less urgency to buy as quickly as they did a year ago. But an unusually high number of projects sold out during the quarter, Lynn said.
In a separate report, the Meyers Group found that, through June, demand for new homes in Orange County outranked available new homes by 137% because of strong job growth. As a result, Orange County ranked eighth in the quarterly measure of the nation’s hottest housing markets.
Los Angeles finished first for the second consecutive quarter. Riverside-San Bernardino ranked 10th and Ventura was 13th.
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Still Stratospheric
The median price for new houses in Orange County moved up nearly 4.5% in the most recent three months from the same period a year ago, but prices are still 140% above the national median.
Third-quarter median price
O.C. 1997: $276,400
O.C. 1998: $355,990
O.C. 1999: $371,990
U.S. 1999: $155,000
Orange County, by area
Coastal North: $584,990
Central: $346,990
North: $389,990
Coastal South: $304,990
Inland South: $349,000
Source: Meyers Group
