Home Prices Just Keep On Climbing
In a surprising show of strength, resale home prices in Orange County rose to their highest level ever in February on a pace that could put the typical home cost at $280,000 by the end of the year, a real estate research firm reported Wednesday.
The 10.6% increase over the previous February, coupled with a 13.6% increase in the number of homes sold, bolstered what many economists have come to believe: County home prices will continue to rise briskly this year.
Many analysts had thought that higher interest rates and rising prices would dampen demand for homes, especially during what is usually one of the slowest months of the year.
Instead buyers paid $250,000 for the typical home, up from the $226,000 paid in February last year, according to Acxiom/Dataquick Information Systems Inc. in San Diego. However, the median price--the price at which half of the homes sold for more and half for less--dropped slightly from January’s $251,000 price.
The market’s considerable endurance has surprised some analysts. February’s increase marked the 33rd consecutive month in which prices surpassed year-earlier levels.
“We’re probably in for a rigorous spring home-buying season,” said John Karevoll, an Acxiom/Dataquick analyst who compiled the research. “People have a lot of confidence in the economy and a lot of confidence in their household finances. We really don’t see any imminent danger signals here.”
In fact, if appreciation remains at its current double-digit rate, he said, a median-priced home would reach $280,000 later this year.
“I don’t see anything that will change things right now,” Karevoll said.
Real estate brokers said that in such good economic times, buyers have been willing to overpay for homes. The reason, they said, is that the number of homes on the market is far smaller than the number of people willing to buy.
“I see buyers willing to pay top dollar because if they don’t, someone else will,” said Patrick Knapp, a broker at Re/Max Real Estate Services in Newport Beach.
Because they seem to be earning good salaries, he said, people are more concerned with availability than cost. In fact, the larger pool of buyers has made sellers more patient, he said.
“If sellers don’t get the price they want, it’s no big deal because next week they’ll get another offer on their property,” he said. “Sellers can sit back because they know they’ll get their price.”
Some analysts said they don’t believe the housing market can sustain double-digit growth throughout the year.
Patrick Veling, an analyst at Dynamic Marketing Resources Inc. in Fullerton, said that more and more realty agents and potential buyers are telling him that home prices in Orange County have moved beyond the reach of average buyers.
“I’m hearing anecdotes of people saying, ‘Enough is enough. I’m moving to Riverside County,’ ” Veling said. “When homes are priced so far beyond what people can afford, when people are forced to go outside of the marketplace to own a home, we’ve got a serious problem. This is looking more and more like what we saw in the 1980s.”
February sales were led by new homes, which recorded a 40% gain as several projects released more units. Existing condos increased by 17%, existing houses by 7%. Overall, 3,409 new and resale homes and condos changed ownership during the month.
Acxiom/Dataquick said that the typical resale home cost $269,000 in February, a 12% gain over a year ago. Existing condos rose 9% to $164,000 and new homes rose 2.9% to $333,500.
By summer, during the height of the buying season, analysts said they expect more owners to put their homes on the market.
* AFFORDABILITY
In Orange County, only 34 out of 100 households can afford the median price. B3
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Orange County Home Sales
Orange County’s median home price hit $250,000 in February, a 10.6% increase from a year ago. Sales totalled 3,409, up 13.6% from last year. Sales, median price and median price per square foot for new and resale homes and condominiums, by ZIP Code:
Sales, Prices, Trends
*--*
Sales Median price 1999 Feb. 3,002 $226,000 Mar. 4,446 232,000 April 4,658 232,000 May 4,275 241,000 June 5,129 241,000 July 4,828 238,000 Aug. 4,612 241,000 Sept. 4,450 245,000 Oct. 3,933 244,000 Nov. 3,745 247,000 Dec. 4,272 258,000 2000Jan. 2,607 251,000 Feb. 3,409 250,000
