Home sales decline across the region
October sales fell from a year ago in all six Southern California counties. For O.C., the 25% drop-off marked the seventh straight month of declines.
By HANG NGUYEN
The Orange County Register
Orange County's housing blues spread to the rest of Southern California.
For the first time in more than four years, year-over- year home sales fell in all six Southern California counties, according to data released Tuesday by market-tracker DataQuick. The slowdown even hit the hot Inland Empire market – San Bernardino and Riverside counties – long seen as a refuge from Southern California's higher-priced housing.
In Orange County, builders and real-estate agents sold 3,508 homes in October. That's about 25 percent fewer homes than a year ago – a tad better than Ventura County, which had Southern California's biggest drop-off, with 26 percent fewer homes sold in October vs. a year ago.
Cooling demand has not resulted in significantly lower prices in Orange County. Last month's median price of $532,000 was $1,000 off September's value and $11,000 off August's peak. However, O.C. home prices are still up 21 percent from a year ago.
"Everybody is watching Orange County," said DataQuick analyst John Karevoll, where the sales pace has fallen from a year ago for sevenconsecutive months. The past three months have been particularly ugly, with home sales declining at a 25 percent annual rate - or worse.
"Trends emerging in Orange County could emerge elsewhere soon," he adds.
Like many experts, Karevoll isn't sure if Orange County's significant pullback in home sales could translate into a serious, long-term price decline - or just be a temporary lull.
Here's some questions that surround Orange County's housing market:
Q. Why are home sales slowing?
A. Many experts think it's an affordability issue.
By one measure, the affordability rate slightly improved from August to September. But it was still near 16-year lows.
In September, only 13 percent of Orange County households could afford a median-priced home, according to the California Association of Realtors.
Mortgage rates near 40-year lows haven't helped much. A typical O.C. buyer's monthly mortgage and tax payments are up 17 percent in a year to $2,314 in October, DataQuick says.
Q. Are certain kinds of homes getting less attention from shoppers this year?
A. The slowdown appears to be widespread. Real-estate agents sold about 23 percent fewer traditional homes and 25 percent fewer condos in October vs. a year ago.
Builders' selling has slowed at a 30 percent annual rate, DataQuick says. So it seems that shoppers are turning away from both the pricey stuff as well as cheaper housing.
Q. Just how do buyers afford these high prices?
A. Adjustable-rate mortgages and fat down payments.
In October, 79 percent of buyers chose an adjustable-rate mortgage, which initially offers lower rates than traditional fixed-rate loans. That's the highest usage of adjustable deals since 1988.
Also, buyers in October put down 22 percent of the purchase price, or about $118,000, which was close to $23,000 more than last year.
Q. Isn't a 21 percent year-over-year price gain pretty hefty?
A. Yes. But the local housing market is not has hot as it was. In May, home prices were appreciating at a 36 percent annual rate.
Q. How do O.C. price gains compare to other counties in Southern California?
A. October's 21 percent annual gain in home values was the lowest in Southern California. San Bernardino County's 30 percent was the biggest boost in price.
Q. These DataQuick statistics are for October. What has happened in the local market since then?
A. Falling prices and a growing selection of homes for sale has kept many shoppers waiting on the sidelines.
The supply of traditional homes and condos on the market has more than tripled from last year. However, it dropped 2 percent for traditional homes and 1 percent for condos from Oct. 31 to Nov. 16, according to First Team Real Estate.
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