Home Buying Slump Ends

Fueled by falling home prices, buyers got moving in July and pushed sales up 23 percent over last year in Orange County, ending a 33-month home buying slump. DataQuick reported that last month’s sales jumped to 2,799 houses, condos and new residences, topping the July 2007 number by 408 units. The last time O.C. home sales exceeded the year-ago pace was September 2005. The median price was $461,000 – down 28 percent in a year and the lowest median since January 2005. Orange County’s median – the price at the midpoint of all sales – has fallen $184,000 from the all-time high of $645,000 reached in June 2007. That’s equivalent to a price drop of $431 per day for the past 13 months. With sales on the rise, and inventory declining, many buyers are convinced that we have hit that magical period of time where we are at the bottom of the market. There are plenty of bank owned homes at very good values, plus short sales. It is not uncommon for multiple offers to occur on the best priced homes, so be prepared to bid against someone else!

Should You Buy a Home Now?

Recent economic developments indicate that California may be the first state to find the bottom based on the increase in sales volume in the previous three months. In Orange County the number of sales has risen each month since January. As a matter of fact, sales are up 140%. Although approximately 40% of the transactions were foreclosures, short sales, and other distressed properties, the increase is allowing the market to stabilize by depleting some of the excess inventory. Some experts believe that once a neighborhood’s median price declines to 50 percent from the peak value that homes in that neighborhood will no longer depreciate. Median price in Orange County is hovering at $566,000 and has been pretty stable so far during 2008. Plenty of buyers are wondering if now is the right time to purchase a home, or should they wait for the “bottom of the market.” The ever elusive “bottom” too often escapes buyers simply because it is not a point in time; but rather a period of time that is observable only after prices are on their way up again. It is important to keep in mind that real estate is cyclical and is best viewed as a long term proposition.