O.C. Market’s Going Steady : Some Hopeful Signs Emerge as Sales, Prices Level Off

Although Orange County home sales continued to inch up last month, prices remained relatively flat, according to a real estate data firm.

The median selling price was unchanged from April of last year at $192,000 and down from $193,000 in March. Analysts said a surge in sales of smaller, more affordable resale homes helped hold down prices.

“Smaller detached homes of about 1,600 to 2,000 square feet are really hot right now,” said Jason Hartman, an agent with Remax Premier Realty in Irvine.

In fact, the home price-per-square-foot actually increased to the highest level in two years, said John Karevoll, an analyst with La Jolla-based Acxiom/DataQuick.

Sales increased slightly, but it appears the huge gains experienced over the last 18 months are leveling off.

“We’ve had such a steady growth in home sales, it can’t keep increasing forever,” Karevoll said. Overall, housing sales picked up 1.4% in April to 3,460 from 3,411 the same period a year earlier.

The strongest improvement was seen in the resale condo market, where April sales increased 10.8% from the same time last year to 679. And with some of the more distressed properties already sold in foreclosure sales, the median condo price is now starting to rise. It edged up 1.1% in April to $121,000 from $119,700 last year.

“The first-time buyer is coming back into the market,” said Pat Neal, a Huntington Beach real estate agent. “They seem to be a little bit more secure in their jobs.”

And, she said, these primarily younger buyers are snapping up condos while prices are still low.

The resale market also is starting to benefit from Orange County’s accelerated job growth and recovering economy. Sales of detached homes increased 2.6% to 2,325 from 2,265 in April of last year. Prices edged up 1.5% from last year to $206,000 from $203,000 last year.

But real estate agents said not to expect any bidding frenzies as in the late 1980s. Competition isn’t that fierce and multiple offers are few and far between.

“Buyers are more sophisticated. They want a good value and they are not speculating,” Hartman said.

Analysts and agents alike were concerned that rising interest rates could affect the recovering market. Instead of pulling some buyers off the fence, it could make them stay out of the market entirely, said Walter Hahn with E&Y; Kenneth Leventhal in Newport Beach.

By the end of April, the rate on a 30-year fixed-rate mortgage was up to 7.92% from 7.44% in mid-February, according to Mortgage News Co. in Santa Ana.

Slightly higher mortgage rates may have kept some buyers out of the new home market. Sales in this category slid 14.4% to 456 from 533 last April. And the median price of these homes remained relatively unchanged at $226,500 from $227,000 last year.

Analysts predicted that sales volumes are shrinking because builders are selling more expensive homes.

“Builders are migrating to larger homes where they can make more money,” Karevoll said. These grander homes often don’t sell as quickly as homes aimed at the first-time buyer.

Les Thomas, division president of Walnut-based Shea Homes, acknowledged that builders are shifting to more move-up housing now that land prices are increasing. However, he said that new homes sales and prices are healthy this year.

“We are 34% ahead of where we thought we’d be in sales,” Thomas said. In fact, he said, these increasing sales have prompted Shea to raise prices on all five of its Orange County communities.

Of the 75 ZIP Codes in the county, 55 reported prices increases and 20 reported price decreases. Some of the most improved markets were:

* Laguna Niguel, where the number of sales jumped 16.3% to 178. Median prices in this city also increased 17.8% to $265,000.

* Dana Point, which recorded 71 sales last month, a 22.4% increase. The median price also increased 15.3% to $244,500.

* Rancho Santa Margarita, where sales increased 32.6% to 114. The average price rose 11.9% to $179,000.

Stabilization in prices also has managed to reduce the number of foreclosures this year. They were down 35% to 872 last month, from 1,345 the same period last year.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Sales, Price Trends

*--*

Sales Median price 1996 April 3,411 $192,000 May 3,865 $198,000 June 3,461 $196,000 July 2,983 $193,000 Aug. 3,390 $196,000 Sept. 2,933 $193,000 Oct. 2,849 $191,000 Nov. 2,819 $190,000 Dec. 3,209 $195,000 1997 Jan. 2,292 $185,000 Feb. 2,319 $186,000 March 3,065 $193,000 April 3,460 $192,000

*--*

****

*--*

April April Sales Median Price 1993 2,506 $200,000 1994 3,313 $198,000 1995 2,143 $195,000 1996 3,411 $192,000 1997 3,460 $192,000

*--*