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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ild who wrote (9804)	7/25/2004 2:47:22 AM
From: mishedlo	Respond to of 116555

Thanks ILD. For those that do not want to register: Home sales drop in O.C. The decline is the latest sign that high prices are taking a toll. But most experts believe the market is still healthy. By HANG NGUYEN The Orange County Register Evidence mounts that the Orange County housing market is cooling from its red- hot sales pace of the past year. Experts say that rising home prices have given some shoppers a reason to not buy in recent weeks. According to Real Data Strategies in Brea, local home sales in the four weeks ended June 21 were down 15 percent from a year ago. Real Data's figures do not include sales of new homes or activity in some parts of the county. The sales decline has accelerated, dropping to 34 percent for the past four weeks versus a year ago, Real Data says. While the housing market has clearly decelerated from the most frenetic pace in 15 years, most experts believe the market is still healthy. "We've hit a price wall," said Pat Veling, Real Data's owner. "This is getting closer to a more normal real-estate market. It's not a crisis. It's not a meltdown." According to Veling's data, prices remain strong. Real Data's average sales price for a local home in the past four weeks was up 38 percent vs. a year ago. Real Data's falling sales figures are not the first sign that high prices are taking a toll on the market. For example, DataQuick reports that sales for all O.C. homes sold in the four weeks ended July 6 was down 10 percent from a year ago. And real-estate agents say the inventory of homes for sale is on the rise, forcing some sellers to discount the price they want for their home. A similar slowdown is taking place in the new-home market. Builders aren't raising prices as much as they used to, said Michelle Wolkoys, manager director for consulting firm Meyers Group in Costa Mesa. "We are definitely seeing the market change," she said A NEW PARADIGM Gae Brummett, a real-estate agent for Prudential California Realty, noticed the difference a month ago as homes sat on the market longer. "The buyers are thinking the market is going to come down," she said. "So they are holding off." All this has got her nervous. "We're all concerned because we've seen this happen before," said Brummett, who was working in the industry in 1989 – when housing prices peaked and then declined for almost seven years. She understands that housing cycle is different from today's, but she questions how high can current prices go. The new-home market is also skittish. Wolkoys of Meyers Group recalls that it was not too long ago that new homes sold as soon as they were available. Now, some of the homes take weeks to sell, so builders aren't raising prices as fast. In June, new homes sold were 13 percent more expensive than a year ago, according to DataQuick. In June 2003, price hikes for new homes ran at a 22 percent annual rate. Looking at all of this, Wolkoys said: "I am not worried at all. We're still supply constrained." But John Burns, a real-estate agent in Irvine, has a different take. "Low supply does not assure builders that price appreciation will continue or that current pricing can even be maintained," he said. To soften the blow of a possible price decline in Orange County, Burns says many builders have ventured into affordable-housing markets in nearby counties. Jeff Lazerson, president of Portfolio Mortgage in Laguna Niguel, is seeing a 30 percent decline in loans he's making to buy local homes in the past month. During that time, the average 30-year fixed mortgage fell by close to one-third of a percentage point. "This is the perfect time to buy, ... yet there is no action," he said. "The fear is that 'Am I going to be landing on a sinking ship?' " REDUCING THE PRICE Jack and Paula Taylor are surprised at how quickly the market changed. In early June, the retired couple agreed to pay the list price of $989,000 for a four- bedroom residence in San Juan Capistrano. They started the transaction just three days after the home went on the market. A month later, they put their Huntington Beach home on the market for $1.2 million. After they got no offers in the first two weeks, they discounted the price by $50,000. Still, no takers. "There's no question that it's tougher for the seller," said Jack Taylor, 68. In the meantime, the couple drained their savings accounts to work on their new house in San Juan Capistrano. They'd rather use the money from the sale of their Huntington Beach home, but they don't know when that's going to happen. "There is concern," Jack Taylor said. ocregister.com