A mid-summer credit crunch took a big bite out of Orange County's housing market last month, with home prices falling by their biggest margin in 12 years and sales tumbling to their lowest level in at least two decades.
Sales fell 44 percent from a year ago to 1,643 homes last month, according to real estate market tracker DataQuick Information Systems. That's the lowest number of homes sold per month in the 20 years that DataQuick has tracked the local housing market. Agents said in some cases they had buyers but couldn't get the financing.
Kurt Galitski, an agent with Weichman Associ ates in Costa Mesa, said he had three escrows in August that were delayed because lenders abruptly decided not to fund the buyers' loans. The deals ending up closing two to three weeks later than expected. Other agents weren't as lucky, though, and their deals ended up falling apart, he said. "A lot of them fell out because (the buyers) couldn't get the loan," he said.
The median price of an Orange County home fell 9.5 percent from the year before, dropping to $570,000. It is the first month in 2 ½ years that the median price - or the price at the midpoint of all sales - has dropped below $600,000. That price was down $75,000, or nearly 12 percent, from the peak price of $645,000 reached in June. In the last down cycle, the drop from the peak to bottom was 16.3 percent from July 1991 to January 1996, according to DataQuick.
Median prices fell in 61 of the county's 83 ZIP codes, with price gains mainly in high-cost areas like Newport Beach, Dana Point and Coto de Caza. Median prices averaged $1.4 million in the 21 ZIP codes with price gains. The average was $577,000 in the ZIP codes where medians went down.
"Those are the affluent neighborhoods in Orange County, so these people didn't indulge in the (exotic loan) craziness nearly to the extent that others did," said Walter Hahn, an Irvine real estate consultant.
Last month's sales were roughly equivalent to one transaction for every real estate office in the county, based on a 2005 Census count of brokerages.
Rick Gorman gave up trying to sell an investment property in Rossmoor after failing to get a single offer in three months, even after dropping the price from $950,000 to $899,000. "We decided there was no sense in giving it away," said Gorman, 52, a marine surveyor. "The real estate market will come back at some period. ... (We'll) wait it out."
Resale houses experienced the biggest drop last month, with sales falling 50 percent from a year ago, to 942 homes, DataQuick said. It was the first time in DataQuick's records that house sales here fell below 1,000.
The median price for resale houses fell 3.7 percent to $655,000, down $79,000 from the record price set in June. The median price per square foot of a single-family house was $378.36, down 12.8 percent from a year ago.
Existing condo prices were down 4.8 percent to $419,000, with sales down 44 percent.
The credit shakeup resulted in a 52 percent drop in "jumbo" loans, or loans greater than $417,000, said DataQuick analyst John Karevoll. Lenders issued 496 jumbo loans in September, down from 1,024 in August.
"It's a huge drop, and it impacts Orange County more than other counties ... because a higher portion of those loans are there," Karevoll said. "The lenders turned the spigot off for those loans."
Hahn predicted that the current slump will last two to three more years, saying it will take that long for the number of "funny money loans," or mortgages with low teaser rates that reset to higher payments after two to three years, to work their way through the system. As more homeowners default on rising mortgage payments, rising foreclosures will continue to hold prices down, he said.
Housing economists issued similar forecasts last week at the California Association of Realtors conference, saying it will take six months to a year for the market to hit bottom.
But Galitski, the Costa Mesa agent, expects the market to bottom out in the next few months. "I've been getting more contacts from buyers in the last month than the last six months," he said. Buyers on the sidelines may see record-low sales and price drops as signals that the bottom is near, he said. "I think they're saying, ‘We're getting close now. It's time to get back into the market.' "
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