New-Home Buyers in O.C. Face Dwindling Supply, Rising Prices

This is what new-home seekers can expect to find this year: a diminishing number of Orange County homes to choose from, a rising number of other bidders for those houses, and a higher selection of single-family homes costing far less in Corona and the Inland Empire.

Like other analysts, John Burns of the Meyers Group, an Irvine real estate research firm, expects prices to rise in Orange County, but at a slower pace this year than the record rate last year. But that doesn’t mean entry-level or even middle-class buyers will have an easier time.

One reason is that new jobs are being created at a rate that exceeds new housing units by a wide margin. As a result, many analysts believe nothing exists on the horizon, short of an economic collapse, that will change the forecast.

In January, for instance, only 502 homes in Orange County were approved for construction, the lowest number in three years. Of that total, the number of attached homes, the primary source of affordable housing, dropped to 123 units, less than half of the total a year ago.

The number of new condominiums or apartments makes up only about 18% of the new housing market, according to the Meyers Group.

The scarcity of these homes is a key reason Orange County prices hit a record high. The median home price--the point at which half cost more and half cost less--rose to $240,000 last year, up 6% over the previous peak of $227,000 in 1998, according to Acxiom/Dataquick Information Systems Inc., a La Jolla real estate research firm.

Indeed, nearly four jobs were created for every housing unit approved last year, the second highest rate in the state behind Los Angeles, said Burns, who spoke recently at a seminar sponsored by the Orange County Building Industry Assn.

Orange County is expected to produce about 12,000 housing units this year, about the same as a year ago, economists said, while job growth also is projected to remain at about 40,000.