Strong job growth, low interest rates and too few listings continue to stoke homebuyer demand in Orange County, Laguna Hills, and across Southern California, driving up prices and boosting sales, housing market watcher CoreLogic reported Monday.
Homebuying soared 14.5 percent in August, rising year over year to 3,633 transactions. That’s the highest number of transactions for an August in 11 years, CoreLogic figures show.
The calendar may provide one possible explanation for last month’s increase. There were two extra business days than in August 2015. That boosted last month’s sales by at least 300.
But that alone didn’t account for improved sales or higher home prices.
Home sales averaged 158 transactions per day last month, vs. 151 per day in August 2015.
Meanwhile, the median price of an Orange County home – or price at the midpoint of all sales – jumped 6.4 percent to $649,000, the third-highest median on record.
“The big picture is that the housing market continues to edge back toward normalcy in the wake of the worst housing bust in modern history,” said CoreLogic research analyst Andrew LePage.
Finding agents to comment about the housing market was tough Monday. Many said they were too busy to talk.
“I have a lot of listings, and a lot of them are in escrow,” said Al. “Cheap lending” and large numbers of international buyers continue to generate competition among buyers, he said.
“Lack of inventory is causing the prices to go up,” added Chuck
Mortgage appraisers sometimes are skeptical of the price gains, valuing properties below their sale price, Chuck said.
For example, a three-bedroom house he sold for $750,000 in Orange appraised at $700,000, forcing the seller to drop his price by $25,000 and the buyer to cough up a larger down payment to keep the deal alive.
“Demand is high, so prices continue to go up,” said Steve Thomas, author of the ReportsOnHousing.com inventory report. “This low-interest-rate environment is maintaining affordability and keeping demand hot.”
How low are rates?
Freddie Mac’s weekly survey shows the rate for a 30-year, fixed-rate mortgage hovered just above record lows for the past year, averaging 3.7 percent.
How low is inventory?
The supply of homes listed for sale for $500,000 or less fell to 1,373 in August, compared with an average of nearly 2,000 sub-$500,000 listings the previous three Augusts.
As a result, sales of homes for under $500,000 fell 9.6 percent last month, while sales for homes priced $700,000 and above rose 26.7 percent.
Brea real estate consultant Pat Veling of Real Data Strategies called that “price creep.” Homes selling for $500,000 last year now sell for $600,000 and above, he said. Homes selling for $850,000 two years ago now go for more than $1 million.
Agent Brenda wondered how homebuyers can continue paying $700,000 to $750,000 for homes in the Huntington Village neighborhood in which she specializes. In a county where the median household income is just above $87,000, she’s hearing some buyers complain about the lack of affordability.
“There are some people who are saying, ‘I’m waiting for prices to go down.’ That’s not going to happen,” Brenda said. “To qualify for a $500,000 home, you have to make $80,000 to $100,000.”