Few people would have been stunned if the real estate rebound hit a speed bump in 2016.
Some folks had questions about the overall economic expansion. Geopolitical anxieties were high. Hey, who’ll be the next president?
Closer to home, affordability for many house hunters is challenging, and the limited supply of lower-priced residences to buy compounds the problem.
Surprise! Both Orange County home sales and prices rose in 2016’s first six months. To find out why, I tossed housing stats from CoreLogic and state employment data into my trusty spreadsheet to gauge Orange County’s homebuying health.
Here are five key things I learned about the market:
1. Busiest start since 2006
Buyers either ignored the hype of financial and political hijinks or felt that an Orange County home was a good investment in which to ride out the storm.
In 2016’s first six months, 18,470 Orange County homes were sold – up 2.4 percent from a year ago, CoreLogic reported. More importantly, it was the fastest sales opening of a year since 2006.
Local homebuyers have certainly gotten over their post-bubble skittishness. First-half sales the past four years have run 21 percent faster than the 2007-2012 period.
But the current rate of Orange County purchasing is no crazy buying mania. Note the 2013-16 sales pace is 30 percent slower than the high-speed buying of 1997 through 2006.
2. Prices up just about everywhere
For the first six months of 2016, Orange County’s median selling price for all residences was $638,250 – up 6.4 percent compared with a year ago, according to CoreLogic.
At the neighborhood level, prices were up in 67 of 83 Orange County ZIP codes compared with the previous year.
There weren’t many bargains to be had.
Buyers paid up for Orange County single-family homes: The median price was $695,000 – up 5.3 percent from a year ago. Condos, too, got pricier, with a median selling price of $444,500 – up 7.9 percent from a year ago.
3. Odd mix of sales gains
You can see curious shopping patterns, depending on how you slice the homebuying data.
By geography, sales rose in only 42 of 83 Orange County ZIPs compared with the year-ago period.
Resales of bargain hunters’ favorite products – Orange County condos – slipped 0.1 percent from a year ago. But more expensive single-family home sales totaled 11,216 – up 0.4 percent from a year ago.
In the 27 least expensive Orange County ZIPs – with a median price at $550,000 and below – total sales were up 3 percent compared with a year ago. In the 27 priciest ZIPs – median price beginning at $722,000 – sales were up 4.2 percent vs. 2015.
It seems house hunters are either being selective … or have fat wallets.
Of course, the ultrahigh end is hard to figure out. In the eight Orange County ZIP codes with median prices above $1 million, sales dropped 4.2 percent compared with a year ago.
4. New is hot. Finally!
Developers are back in gear as first-half sales of new Orange County homes topped 2100 – up about 22 percent from a year ago, CoreLogic reported.
This was only the second time that builders’ first-half sales rose above 2,000 since 2006 (2014 being the other).
Maybe the upswing is due to relative temperance on pricing. Orange County’s new-home median selling price was at a crazy-high $812,000 – but that was down 3.4 percent from a year ago.
Builders are a growing presence in the market, taking 11 percent of the first-half sales of the past three years, nearly double the 6 percent share of 2009-11. Still, it’s not the 19 percent share of 1988-90 or 1995-1997.
Most troubling is the reluctance/inability of developers to build faster. Orange County’s new home sales averaged just 1,481 in the past decade vs. a 3,274 annual sales pace from 1988 to 2006.
That 55 percent drop in homebuilding robs Orange County shoppers of fresh supply, forcing house hunters to pay up in a market troubled by limited inventory from which to choose.
5. Jobs! Jobs! Jobs!
Who can afford homes at Orange County prices? People with new jobs. And there are plenty of them.
Orange County bosses employed an average 1.57 million workers in the first six months of the year, according to the state Employment Development Department. That’s 45,500 more than the same period in 2015.
Please note this critical stat: This is the fastest hiring spree to start a year in terms of the number of jobs added since 1999. Bosses are hiring this year at triple Orange County’s average hiring pace since 1990.
Joblessness is down, too. Unemployment averaged 4 percent in the first half, the lowest average rate to start a year since 2007.
Even better, jobs being created aren’t just those serving tables, though restaurants did add 6,400 positions in the past year.
Added homebuilding helped construction payrolls grow by 13,150. Jobs in often high-paying professional, scientific and technical services rose by 5,100. Bosses in health care and social assistance added 5,650. And staffs at local schools grew by 3,300 in the year.
The solid job market is a two-edged sword for housing: It creates more house hunters, who in turn push up prices.
Think about it. How many of those new jobs have to be “good” to pay for the 18,470 homes sold in the first half? Not many: Roughly, one-third.
It’s a price of success.
Original article published on OC Register written by Jonathan Lansner