Orange County housing sales jumped 22.6% last month, the biggest increase in 18 months, but the good news was tempered with bad: Prices slid to their lowest levels in more than seven years.
The continuing price drop was fueled by a record 45.2% increase in foreclosures last month from the preceding January, according to figures released Monday by Dataquick Information Services, a real estate data firm.
Analysts hailed the increase in sales of new and existing houses during January from the same month a year ago as good news for the recovering economy.
"This is what we've been waiting for. This improvement in home sales is long overdue," said Anil Puri, head of the economics department at Cal State Fullerton.
A total of 2,093 new and existing homes were sold countywide last month compared to 1,707 homes sold the same time last year. That's the biggest year-to-year increase since June 1994, according to Dataquick.
"Housing prices will be slower to improve but will stabilize," said Puri, who predicted that sales increases would continue this year.
Home values languished in January, with median home prices dropping 4.1% to $186,000 from $194,000 a year ago. It was the lowest median price since mid-1988, Dataquick said.
"Foreclosures are still putting an overall drag on prices. Some of these properties are being sold at steep discounts," said John Karevoll, analyst with La Jolla-based Dataquick.
He added that increasing numbers of first-time buyers purchasing less expensive homes were contributing to the trend.
A total of 1,440 homes entered foreclosure in January compared to 992 homes for the same month last year, mostly because lenders are increasingly anxious to unload bad properties, said Karevoll, noting that the increase is the largest since Dataquick began tracking foreclosures in 1992.
Still, if current trends persist--low interest rates, increasing sales and a better economy--home values may start improving by spring, Karevoll said.
The increase in home sales was welcome news to brokers, homeowners and home builders who want to forget most of 1995, when home sales dropped 15.3% and home values slid 4.5%.
And last month was an improvement from January 1995, when homes sales fell 26% from 1994 as record rains and the county's bankruptcy filing the month before took its toll.
"Things are definitely picking up. Our agents are really busy," said Liz Koren, a broker with RE/MAX Crown Valley in Mission Viejo. "Certainly it's better than last year when it was pouring down rain and we were all twiddling our thumbs. These gloriously low rates are helping."
The current 30-year fixed-rate mortgage loan averages 6.839% with two points, one of the lowest rates in years, according to Earl Peattie, publisher of Mortgage News Co., a data firm in Santa Ana.
Recent home buyers said current low interest rates and rock-bottom housing prices helped get them off the fence.
"The time is perfect," said Steve Lin, 23, who will close escrow this week on a two-bedroom condominium in Irvine for $96,000. "It's the deal of the century. Give me two months and I am going to buy another home."
Conni Manahan said low interest rates helped her and her husband buy a three-bedroom Woodbridge home for $295,000 after they sold their home in the San Fernando Valley.
"It's so pretty here--the valley had deteriorated so badly," she said. "We had wanted to move, but the rates were a contributing factor."
Even in the higher-end market such as Newport Coast, interest is up. During January, the Irvine Co. sold seven custom housing lots for about $1 million each; that compares to only two lots sold during the same time last year, said Rudy Svrcek, vice president of sales and marketing with the Irvine Co.
"Confidence is on the upswing," Svrcek said. "There's little to no focus on the bankruptcy anymore."
Mortgage bankers said so far 1996 is starting off right.
"I'm originating a lot of loans right now. With the reduction in rates last week, I was on the phone all day. People want to be prequalified," said Craig Morrow, a loan officer with Sanwa Bank in Santa Ana.
Morrow said more bank-owned properties are being aggressively marketed.
"The days of the $80,000 condo may be coming back," he said.
* O.C. MOVEMENT
A breakdown by ZIP Code of home sales, median prices. D1