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O.C. Home Sales Fall 6%; Prices Still Up

Shifting Rates May Have Spooked Buyers in October, Analysts Say

November 11, 1998|DARYL STRICKLAND | TIMES STAFF WRITER

Orange County home sales fell in October--the first year-to-year decline in 16 months--but prices continued their upward march, climbing 10.6% from a year ago to a median $230,000.

Sales fell 6%, to 3,913 homes, as the gyrating stock market and sharp shifts in mortgage rates apparently spooked some buyers.

But the sales downturn may prove to be little more than a one-month aberration, said John Karevoll, an analyst at Acxiom/DataQuick Information Systems Inc. in La Jolla.

"There's nothing on the horizon that's ominous," Karevoll said. "Frankly, there's nothing we see in the numbers that could derail this for a while."

Indeed, once mortgage rates began retreating after a brief surge, people resumed buying homes at a healthy clip, and that should result in a stronger-than-usual November housing market survey, he said.

October's median price matches the second-highest median ever reported in Orange County, first reached in August this year. The all-time high of $236,000 was set in June.

In one of the biggest years ever in Orange County's housing industry, year-over-year prices have risen by double-digit increments in 11 of the past 12 months. The only exception came in September, when prices barely missed the mark, rising only 9.7%.

Like the rest of the nation, where home sales are on a record pace, Orange County's housing market still is expanding, Tuesday's report indicates. Given that job growth remains strong, the current housing boom should be sustained through much of next year.

Home values have continued rising throughout the state. Across California, homes surpassed their pre-recession levels in October, and the same is expected in Orange County this month. Because of rising values and economic growth, the number of Orange County homeowners facing foreclosure dropped to 1,379, the smallest number since Acxiom began tracking the number in 1992.

Prices grew across the board in year-over-year comparisons, the monthly survey showed. For instance, the median price of a new home soared 33%, to $354,250, from $265,500 a year ago. Resale condo prices jumped by 16%, to a median $151,500, and home resale prices grew 9%, to a median $240,000.

Still, usually optimistic real estate agents are sensing a softening in the market. They note that buyers are looking at a broader selection of homes, rather than snapping up the first one available.

"Buyers don't have the sense of urgency they had three or four months ago," said John Williams, an agent with Re/Max South.

And that is affecting sellers. Of 10 listings Williams has currently, seven have trimmed their prices, usually in 2% increments.

Moreover, Williams hasn't seen multiple offers on a home in two months.

"We're not seeing the bottle rocket-style appreciation we saw three or four months ago," he said.

No one knows that better than Lori and Daniel Ott. The Aliso Viejo couple, hoping to trade up into a larger home, put their three-bedroom, 2 1/2-bath home on the market in September.

They noticed that the exact same model, a block away, sold for $268,900 in July, so that's the price they asked for when they put their home on the market in September. For two weeks, the couple didn't get one request to see the house.

They cut the price by $4,000, which resulted in several showings, but no offers. They dropped the price another $4,000, got an offer and sold the home this month after the buyers negotiated $5,000 more off the home, to $255,900.

"The reason we lowered our price is because other homes in our neighborhood lowered their prices too," said Lori, 28. The family still turned a healthy profit, more than 30%, which should allow them to buy a larger home in the area, she said.

A shortage of inventory was partially to blame for October's sales downturn. Although condo sales jumped 13%, new-home sales plunged 36%, to 388, because there aren't enough lots ready for construction.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Orange County Home Sales

October home sales dropped 6.2% from a year ago, but the median price increased 10.6% to $230,000. Sales, median prices and median price per square foot of new and resale homes and condominiums, by ZIP Code:

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