Home Sales Decline as Supply Thinned

Home sales in Orange County fell sharply in July from a year ago, but analysts said it was not because of slowing demand but rather the thinned supply of houses on the market.

Last month, the number of new and existing homes sold plummeted 21% from a year ago, the biggest decline in five years, according to a report released Monday by DataQuick Information Systems, a La Jolla research firm.

Despite the sales drop-off, prices last month for virtually every category of homes streaked higher. The median price of homes sold in July jumped 11% in Orange County from a year earlier to $264,000. It was the highest for any July and the 38th consecutive month of year-over-year gains.

There was a similar pattern in Los Angeles County, where sales declined by more than 17%, the steepest monthly slide since the early 1990s, DataQuick said. The typical price rose a more modest 3.7% to $198,000.

Analysts said demand for homes generally remains strong, thanks to robust job and population growth. But this summer, during the traditionally peak selling months, sales have bounced up and down. In Orange County, more homes were sold in May and June than at the same time a year ago, but then activity slumped in July.

“Lower sales is a problem resulting from a lack of inventory rather than people running away from the market,” said Rajeev Dhawan, director of econometric forecasting at UCLA Anderson Forecast.

The July sales numbers--3,823 in Orange County and 9,015 in Los Angeles County--were compared against July 1999, which accounted for the third-highest total in both counties since DataQuick began keeping records in 1988.

“I think the market is taking a breather,” said John Karevoll, the DataQuick analyst who completed the survey. “These numbers are only low compared to the higher numbers of the last decade. I don’t see this as a turning point.”

Still, Karevoll and other industry executives said, some potential buyers have paused in making a purchase because of the skittish stock market, which a growing number of people tap as a source for down payments.

“The stock market hiccuped from April through the Fourth of July, and we experienced a slight slowdown,” said Alison McCormick, senior sales associate at Coldwell Banker’s Newport Beach office. “Some sellers thought they could put homes on the market at too high a price, but they’ve just sat there.” She said, however, that there’s no shortage of buyers.

At the same time, mortgage rates had been rising most of the year, and coupled with record prices, have created higher monthly payments that have locked out more potential buyers.

The July home sales numbers represent actual closings, reflecting mostly market activity and agreements struck over the previous 30 to 60 days. The average 30-year fixed-rate mortgage in May and June was 8.3% and 8.2%--generally their highest levels in four years, according to the Mortgage Bankers Assn. of America, a Washington, D.C., trade group.

Rates have since nudged downward, and Greg Sayegh, a senior vice president at Washington Mutual, the state’s largest home lender, said loan applications in several Western states have risen 5% to 10% so far through mid-August over the same period in July. Almost all of the increase has stemmed from California, he said.

But lower rates have not translated into more for-sale signs. The number of homes on the market is relatively low and the homes are high-priced. In Orange County, for instance, there was less than a three-month supply of housing on the market, according to the California Assn. of Realtors. While a nine-month supply signals a stable market, any amount generally under five months indicates sharp upward price pressures.

“Sellers are hesitating because there’s no inventory to move up,” observed Walt Tamulinas, an agent with ERA North Orange County Real Estate.

In the San Fernando Valley, Guy Violas, associate manager of the Studio City Re/Max office, said: “It’s also because some sellers were getting greedy. We’re in an adjustment period right now. The less-expensive homes are going faster because they’re priced right.”

These trends are prevalent in both Orange and Los Angeles counties, brokers say. And as the market gains value, analysts said more people will have regained enough equity to purchase a new home. That, in turn, should help boost sales in August and September, Karevoll said.

“A lot of people are still emerging from the bad market of the mid-1990s,” Karevoll said, “and I think they want to walk away with enough money to make a down payment on a new home, and only recently have the numbers changed to where they can do that.”

Analysts also attribute some of the buying slowdown to the growing problem of affordability. Using the median price for all homes sold in June, the typical mortgage payment in Orange County, assuming a 30-year-fixed loan with a 10% down payment, was $1,690, compared to $1,465 in the same month last year, DataQuick said. Still, with the economy strong and jobs plentiful, most buyers do not appear to be stretching to make housing payments. Karevoll’s research shows that foreclosures remain near record lows, and that the number of buyers using adjustable-rate mortgages, which require lower credit standards than fixed rate loans, declined to 34% of buyers from nearly 43% during the same period last year.

In Orange County, new home prices saw the sharpest increase last month, surging 28% from a year ago to $414,000. The typical price of existing houses rose 12% to $291,000, and existing condos rose by more than 10% to $175,000.

In sales, existing houses recorded the steepest decline, falling nearly 27% to 2,393, compared to July 1999. New home sales fell by more than 15% to 259, and the number of existing condos changing hands slipped 7% to 1,171.

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PURCHASE SLUMP

Last month was the biggest percentage dip in five years of the number of O.C. homes bought. See Chart. B11

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Orange County Home Sales

The number of houses and condos sold slumped 21% in July from a year ago, largely because of a dearth of inventory. Prices shot up 11%, to a July record of $264,000. See story, B1. The chart shows sales, median prices and median prices per square foot by ZIP Code for new and existing single-family homes and condominiums.

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Community ZIP Sales % Median % ’99 ’00 change price change Med. Med. from from sq. sq. ’99 ’99 ft (1) ft (1) A. Viejo 92656 133 -26.9% $235,000 -4.1% $153 $162 Anaheim 92801 27 -49.1% $190,000 14.5% $158 $146 Anaheim 92802 40 81.8% $195,000 13.1% $150 $146 Anaheim 92804 88 23.9% $208,750 12.8% $156 $154 Anaheim 92805 24 -59.3% $190,500 9.5% $165 $150 Anaheim 92806 25 -39.0% $230,000 3.4% $142 $150 Anaheim 92807 63 -21.3% $285,000 12.6% $157 $155 Anaheim 92808 36 -45.5% $265,000 -10.4% $166 $177 Brea 92821 33 -31.3% $258,500 3.5% $157 $145 B. Park 90620 46 -31.3% $211,250 10.0% $160 $166 B. Park 90621 40 17.6% $201,250 1.4% $150 $153 C. del Mar 92625 31 0.0% $771,000 7.1% $380 $363 C. Mesa 92626 54 14.9% $270,000 10.2% $176 $172 C. Mesa 92627 40 -34.4% $248,500 6.5% $232 $232 Cypress 90630 56 -24.3% $241,000 8.2% $161 $160 D. Point 92624 12 50.0% $390,000 11.4% $225 $260 D. Point 92629 61 -11.6% $358,000 -1.2% $237 $225 F. Ranch 92610 24 -27.3% $309,000 12.4% $186 $183 F. Valley 92708 71 -19.3% $284,500 7.2% $175 $168 Fullerton 92831 34 -20.9% $263,500 26.7% $172 $166 Fullerton 92832 18 5.9% $219,250 18.5% $186 $160 Fullerton 92833 64 -12.3% $205,250 5.3% $172 $168 Fullerton 92835 48 6.7% $320,000 10.3% $188 $171 G. Grove 92840 59 -28.0% $213,000 17.0% $164 $163 G. Grove 92841 42 20.0% $206,750 11.8% $159 $163 G. Grove 92843 41 -12.8% $193,000 14.9% $162 $152 G. Grove 92844 43 7.5% $194,454 39.9% $156 $143 G. Grove 92845 22 -12.0% $254,750 7.5% $180 $179 H. Beach 92646 91 -14.2% $271,500 10.8% $215 $209 H. Beach 92647 47 -31.9% $285,000 15.6% $206 $201 H. Beach 92648 70 -10.3% $383,750 15.2% $211 $203 H. Beach 92649 65 -3.0% $300,000 13.9% $250 $227 Irvine 92602 34 325.0% $405,750 18.6% n/a n/a Irvine 92604 46 -38.7% $267,000 4.7% $196 $193 Irvine 92606 19 -26.9% $278,000 -2.1% $198 $199 Irvine 92612 49 -14.0% $310,000 -7.4% $207 $232 Irvine 92614 59 -14.5% $262,000 9.2% $211 $208 Irvine 92618 9 -74.3% $315,000 -7.1% $173 $182 Irvine 92620 79 -37.3% $270,000 -9.8% $178 $171 La Habra 90631 75 -19.4% $205,000 1.2% $147 $157 La Palma 90623 13 8.3% $300,000 13.2% $159 $146 L. Beach 92651 48 -26.2% $685,000 22.9% $338 $391 L. Hills * 92653 95 -32.1% $200,000 7.5% $192 $179 L. Niguel 92677 160 -10.1% $328,750 7.8% $203 $200 L. Forest 92630 116 -24.7% $245,000 6.5% $171 $165 L. Alamitos 90720 28 0.0% $402,500 3.5% $246 $221 M. Viejo 92691 92 -26.4% $273,000 9.2% $178 $181 M. Viejo 92692 116 -14.7% $316,500 13.6% $170 $170 N. Beach 92657 17 -58.5% $832,500 23.3% n/a n/a N. Beach 92660 65 -5.8% $620,000 16.2% $314 $288 N. Beach 92661 5 -28.6% $543,000 -39.6% $299 n/a N. Beach 92663 38 -2.6% $475,000 0.0% $348 $348 Orange 92865 25 -16.7% $236,818 -1.3% $162 $143 Orange 92866 10 11.1% $148,500 -37.3% $148 $159 Orange 92867 29 -49.1% $265,000 7.1% $170 $161 Orange 92868 16 -40.7% $171,500 14.3% $135 $153 Orange 92869 66 -7.0% $253,000 7.0% $156 $157 Placentia 92870 59 -24.4% $269,000 7.1% $146 $155 R.S. Marg. 92688 110 -52.0% $214,500 -6.7% $173 $171 S.J. Cap. 92675 58 -27.5% $222,750 -9.5% $165 $166 S. Clemente 92672 51 -29.2% $286,500 -11.9% $216 $235 S. Clemente 92673 62 34.8% $391,000 12.5% $175 $224 S. Ana 92701 33 -38.9% $125,000 -10.7% $148 $164 S. Ana 92703 34 -26.1% $163,000 10.1% $165 $170 S. Ana 92704 63 -8.7% $178,000 11.3% $158 $157 S. Ana ** 92705 39 -39.1% $407,000 8.5% $188 $190 S. Ana 92706 26 -48.0% $224,500 13.5% $163 $167 S. Ana 92707 50 -21.9% $180,500 14.8% $166 $159 S. Beach 90740 12 -33.3% $360,000 -6.3% $266 $235 Stanton 90680 28 -20.0% $151,000 19.8% $155 $141 Trabuco/Coto 92679 75 -48.6% $460,000 17.2% $166 $185 Tustin 92780 55 -11.3% $170,000 -12.8% $145 $144 Tustin 92782 46 -46.5% $320,000 13.1% $183 $175 Villa Park 92861 2 -81.8% $587,500 -3.7% $222 $214 Wstmnstr 92683 62 -51.6% $245,500 6.7% $172 $159 Y. Linda 92886 67 -17.3% $325,000 11.3% $171 $171 Y. Linda 92887 40 -34.4% $356,000 3.8% $168 $176 Countywide 3,823 -20.8% $264,000 10.9% $159 $174

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(1) Median resale price per square foot * Includes Laguna Woods ** Includes Lemon/Cowan Heights ZIP Code by ZIP Code totals do not add up to county total because ZIP Code totals are calculated differently. Countywide total is correct.