Residential Real Estate Pricing Appears to Be Stabilizing in Orange County

A recent report by DataQuick information services paints a slightly improving residential real estate market picture in Orange County. Median price for all residences in the city stands at about $425,000.

That’s just 0.1 percent down from one year ago. Collectively, prices for houses are down 4.2 percent, and sales have declined 4.1 percent from a year ago. At the same time, inventory of homes has declined substantially. It may not be a great picture yet, and it remains a buyer’s market.

But some industry experts see it as a sign the market is starting to stabilize. In Fountain Valley, the median sales price for a home stands at just under $520,000. That’s down about 7.2 percent from a year ago, according to Trulia.com. But from March through the current week, the average listing price has risen from about $469,000 to $480,000.

Overall sales are down about 22 percent from a year ago in Fountain Valley. Countywide, sales are listed as being down 4.3 percent. But that includes a 69.4 percent jump in new home sales from one year ago. And being nearly built out, Fountain Valley is not where new homes are being built.

Besides lack of new housing, a number of factors continue to slow sales and keep prices from rising in Fountain Valley. The economy remains unstable,  with Orange County’s unemployment rate at about 10.1 percent. That’s up a percentage point from 9.1 percent in December.

Also, Fountain Valley’s median home price is nearly $100,000 more than the average for the entire county. On the positive side, inventory in Fountain Valley has dropped from nearly 200 homes on the market to fewer than 125, and the average price per square foot in Fountain Valley has dropped from more than $300 a year ago to about $283 today.

Another thing slowing sales is the tighter mortgage market and the requirement of a better credit score and generally more money down. Even the Federal Housing Administration has tightened its lending policies. As a result, use of FHA loans has declined. FHA reports that the share of borrowers using government-insured FHA home loans has fallen to its lowest level in more than two years. Only about a third of loans nationally are FHA now.

In Orange County, FHA mortgages have fallen slightly below 30 percent of all mortgages. By contrast, Department of Veterans Affairs loans have held steady. They represent about 6.4 percent of all loans.

Overall, the market may have stabilized slightly, and pricing could edge upward some this summer. But it is likely to remain a buyer’s market for some time.