History teaches us that homebuyers will only pay so much extra for the frequent charms of Orange County's lifestyle and its often job-creating economy. Look at my "Orange premium" - dividing the median selling price for an Orange County house, as calculated by the National Association of Realtors, by the national median buying price ...
Orange County house cost 2.58 times what the median-priced American home sold for in the 3rd Quarter. Now that may not sound like a bargain, but the last time the so-called "Orange premium" was this low was 2002. We're also now under the peak of the late 1980s O.C. housing run-up.
Since, 1982 - on average - its costs double, 2.3 times to be exact - to buy here. This decade's homebuying mania, pushed this premium above three - yes, one O.C. home or three typical American abodes - from 2004 through this year's first quarter. Even in the late, great 1980s buying boom, this premium never got to triple status.The narrowing gap is due to the fact that O.C. prices are 27% off their peak; the U.S. is just down 10%, by this measurement.
And while no benchmark is perfect, it is curious - at a minimum - that my Orange premium is now back near that 2002 level and the late 1980s peak. And, for the premium to revert to its 25-year average it will still have to fall another 9%.
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