Simply put, the third quarter was the slowest three-month period for Orange County homebuying since Data-Quick started collecting housing data in 1988: a shocking 46 percent below the 20-year average.
When the quarter started, a huge problem was a shortage of mortgages for folks with dicey credit profiles. By quarter's end at Sept. 30, folks with good credit seeking to borrow more than $417,000 - so-called "jumbo" deals - found financing problematic, too.
These bookends of mortgage headaches helped scare off buyers. Yet the pain was unevenly distributed. Reviewing sales figures by ZIP code by DataQuick, you see suffering tended to grow the more one moved inland.
For the third quarter, buyers countywide acquired 6,319 homes, down 30 percent from third quarter '06. That ZIP-by-ZIP data clearly show the deepest regional sales declines in what I'll call the county's core - ZIPs in Santa Ana, Orange, Garden Grove, Westminster and Anaheim, minus Anaheim Hills. These neighborhoods host the county's most affordable housing with a sales-adjusted median price of $553,000 for the quarter.
In this core district, thirdquarter sales were down 49 percent vs. a year ago. Compare that to a 22.5 percent drop in the rest of the county. Ouch! A year ago, this county core was nearly 30 percent of Orange County's homebuying market. This summer, it was just 21 percent.
The midcounty buying freeze came despite apparent serious discounting as buyers typically paid 7.4 percent less than they did a year ago. Countywide, the quarter's median was down 2.4 percent vs. '06.
Clearly, the lack of subprime money for dicier borrowers hurt in the county's core. That's where working-class shoppers could, until this year, readily find novel financing. (Whether those mortgages were good for those buyers is a column for another day.) And I'll assume that late summer's jumbo-mortgage shortage bedeviled better-financed shoppers in these communities. Numerous folks probably had difficulties closing deals for midcounty's pricier homes.
Contrast the dreary midcounty picture to the scene in beachfront communities, defined as residences in ZIP codes in towns adjoining the ocean. This is where the typical buyer paid $1.08 million in the third quarter.
Yes, sales of seaside housing were sluggish. But a drop of 13 percent in a year looks rosy compared to the midcounty debacle. Beach city figures confirm reports I've heard that healthy interest remains in luxury homes near the Pacific.
And, curiously, ocean-close ZIPs on average saw median selling prices climb 1.1 percent in a year. But don't instantly think your beach home has appreciated.
Craziness with jumbo mortgages - standard financing at the beach - eliminated many marginal buyers of pricier homes. So the jumbo shopper who did close their summertime deal probably had serious financial wherewithal and typically bought a pricier home. Note this: Countywide, the third-quarter median selling price of homes financed with jumbo loans rose 4 percent in a year.
Looking forward, I'm guessing that certain summertime buying patterns - or, largely, the lack of buying - will modestly reverse soon. Jumbo mortgage financing is back to approaching somewhat normal conditions, but don't expect jumbos to be as cheap or as easy to get as they were in giddier times.
This jumbo money should help close some deals that otherwise might have been finished in the third quarter. Such catch-up dealmaking may boost this year's final quarter. Autumn, over the past two decades, typically sees a 10 percent sales drop from summer. Probably not in 2007.
What's a big unknown is how these subregional differences will play out. Will the low-selling county core's cheaper housing finally entice the dealstarved shopper to act? Are high-priced beach properties deserving of their relative strength? Or is the next trouble spot waiting to happen overlooking the Pacific?
What's certain is that housing's summer was stunningly cold. And it's not heart-warming to know that we're entering the traditionally chillier part of the homebuying year.
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