Sunday, June 26

Orange County median home price tops $1 million for the first time – Orange County Register

Pricing once reserved for Orange County’s luxury housing — a $1 million sale — has become the market’s mainstream number.

The median sales price of an Orange County residence for March — the mid-point of all closed purchases for all home types — hit $1.02 million, according to DQNews/CoreLogic.

It’s the 15th record high in a two-year, pandemic-era homebuying binge. Prices in Orange County rose 3.6% from February and 22% in a year. It’s worth noting that soaring prices have likely cooled the purchasing pace, with March sales down 19% from a year ago.

Orange County now has 45 of its 83 ZIP codes with median pricing of $1 million or more — that’s more than double the 21 ZIP codes with seven-digit median price points just 12 months ago.

“We continue to see some properties under $1 million and over $1 million and over $2 million and over $5 million receive three, five, eight or 10 offers,” says Bob Chapman, a broker with Newport Beach-based Villa Real Estate. “The final sales price in many cases may be determined by the buyer’s urgency more so than the comparable values ​​of other sold properties.”

Just how frenzied has pandemic homebuying been? Orange County prices cracked three $100,000 barriers in just 19 months, leaping 25% in annualized appreciation to join the seven-figure housing club. And that feat is more than a water-cooler trivia.

Continued soaring prices — even as mortgage rates rise — raise huge questions about this upswing’s durability as affordability challenges multiply for house hunters. Rising housing costs also have become a broader economic concern.

Homes in a neighborhood north of Heil Avenue, west of Beach Boulevard, in Huntington Beach, CA, on Tuesday, April 19, 2022. This zip code, 92647 in Huntington Beach, saw a 19.9 increase in home values ​​from March 2021 to March 2022 , with the median home at $$1,025,000. (Photo by Jeff Gritchen, Orange County Register/SCNG)

“The gulf between dreams of buying a first-time home and the reality is wider than ever,” says economist Anil Puri at Cal State Fullerton. “The question is, at what levels do the rising housing prices and high rents pose a real challenge to job growth in OC?”

One of the major pandemic economic surprises has been the rush to buy housing by traditional buyers and investors. Record-low mortgage rates — created in large part as a Federal Reserve economic stimulus — and a thirst for larger living quarters fueled wild shopping habits and dramatic price hikes.

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A shortage of homes to buy has only put more pressure on prices.

“Orange County has been an extreme case in terms of the supply and demand imbalance we’ve seen elsewhere, and has probably benefited from homeowners outside the county looking for “safer” environments during the pandemic,” says Rick Sharga, an analyst with Attom .

“These numbers suggest that we must be approaching a market correction at some point in the not-too-distant future, especially at the higher end of the market, where demand isn’t as strong,” he says. “Not necessarily a crash, but slower appreciation for sure, and probably some price reductions in some price tiers.”

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Milestones and speed bumps

Using a longer-term lens, Orange County’s road to a $1 million median was, by no means, a one-way uptick.

My trusty spreadsheet reviewed DQNews’ price thresholds dating to 1988, finding two other periods of rapid appreciation that also hit serious speed bumps.

“Remember the following Doti Law,” says Jim Doti, economist at Chapman University “The same home prices you see on the way up are the same ones you see on the way down.”

Who can forget the real estate bubble that burst into the Great Recession? It took 12-plus years for the Orange County median to go from cracking $600,000 to besting $700,000.

But many people overlook an equally long troublespot for housing — the 1990s when it also took 12-plus years to go from $200,000 to $300,000.

So let’s take a stroll down Orange County’s home-price Memory Lane to see when these $100,000 thresholds fell — and how three decades of largely declining mortgage rates helped cut homebuyer’s house payments and inflate prices.

$200,000: First crossed in February 1989 with a mortgage rate of 10.66%, creating an estimated $1,520 payment, assuming $20% down. That monthly cost was up 22% from the median’s first month — January 1988 and its $169,500 pricing.

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