There is much confusion and accidental mis-information about the current state of Home and Condo Prices in Orange County, CA. Part of the confusion results in the unique market conditions we are now in in which the lower end of the house pricing spectrum is more negatively impacted then the higher end. The accidental mis-information comes into play by the established organizations that report on housing prices (ie: DataQuick, Major Banks, Major Title Companies) who rely on Average and Median prices, versus Average Price per Square foot. When you couple to two events together, you wind up with some confusing housing price information.
We'll illustrate the conflicting numbers, and then hopefully give some clarity to the subject. But first some basic definitions. The Average for homes prices, is simply the sum total of the sales prices of all homes sold in a certain area (ie: Orange County, Santa Ana) during a certain period of time (ie: 12 months, 6 months, 3 months), and then dividing by that total number of homes sold.
The Median is determined by taking the same list of sold homes, and calculating the sales price at which half of the homes sold were below this price, and half of the homes sold were above this price. Although the Median is a bit harder to calculate, it is considered to be a bit more accurate representation, since the Average can be more easily skewed to the high side by a few very high priced homes sales during the period. Both of these calculations though, can give mis-leading representations when you have a change in buyer habits... which is exactly what is happening now in Orange County.
As an example of the confusion caused by Averages and Median in a changing market, take a look at this recent DataQuick report by the Orange County
Register reporting Median home prices for all cities in Orange County. Buena Park is showing a 20% drop in prices, while Cypress is showing a 6% increase in the same time period. Dana Point shows a 21% increase in prices, while the adjacent city of Laguna Niguel shows a 10% drop during the same period. What gives ? Logic dictates that something is wrong with this type of statistical analysis. The misleading statistics are a result of looking at Median and Average prices, instead of Price per Square Foot, and also combining Condo sales with detached Home sales.
Below is a table of statistics that we gathered for the Average, Median and Price per Square Foot for the Past 3 months (Sept, Oct, Nov), and the same calculations for the same 3 month period 1 Year ago, for various Cities throughout Orange County, for detached Homes only (not including condos). As can be seen, some Cities show only a small drop in Average home prices, and others yield an increase in the Average price, but a decrease in the Median price... while a few other cities are actually reporting an increase of almost 17% to 35% in the past year in Average or Median prices. For instance, Dana Point and San Juan Capistrano are showing large increases in the Average or Median prices in the past 12 months. But ask anyone on the street, and they tell you this is preposterous. The actual truth about home pricing in these two cities (and the rest for that matter) are more closely revealed by looking at the Price per Square Foot which shows a 5.8% drop in Dana Point and a 10.5% drop in San Juan Capistrano.
Sept, Oct, Nov 2006'
| City | Average | Median | Price per SqFt |
| Anaheim | 600,565 | 585,000 | 416 |
| Orange | 763,933 | 690,000 | 404 |
| San Juan Capistrano | 936,449 | 766,000 | 421 |
| Costa Mesa | 826,849 | 743,500 | 488 |
| Mission Viejo | 737,033 | 689,900 | 378 |
| Laguna Niguel | 1,085,506 | 905,000 | 419 |
| Fullerton | 713,397 | 629,000 | 394 |
| Dana Point | 1,516,212 | 980,000 | 644 |
| Irvine | 953,457 | 800,000 | 431 |
Sept, Oct, Nov 2007'
| City | Average | Median | Price per SqFt |
| Anaheim | 514,599 | 495,000 | 341 |
| Orange | 722,213 | 607,000 | 348 |
| San Juan Capistrano | 1,236,999 | 1,039,925 | 377 |
| Costa Mesa | 759,597 | 720,000 | 443 |
| Mission Viejo | 730,547 | 639,000 | 347 |
| Laguna Niguel | 987,340 | 860,000 | 386 |
| Fullerton | 690,645 | 627,000 | 363 |
| Dana Point | 1,784,459 | 1,300,000 | 608 |
| Irvine | 974,121 | 760,000 | 413 |
Percent (%) Change in Past Year
| City | Average | Median | Price per SqFt |
| Anaheim | -14.3% | -15.4% | -18.0% |
| Orange | -5.5% | -12.0% | -13.9% |
| San Juan Capistrano | 32.1% | 35.8% | -10.5% |
| Costa Mesa | -8.1% | -3.2% | -9.2% |
| Mission Viejo | -0.9% | -7.4% | -8.2% |
| Laguna Niguel | -9.0% | -5.0% | -7.9% |
| Fullerton | -3.2% | -0.3% | -7.9% |
| Dana Point | 17.7% | 32.7% | -5.6% |
| Irvine | 2.2% | -5.0% | -4.2% |
How can this be you may ask ? In the past 12 months, there have been fewer entry level buyers purchasing lower price detached homes using low down payment financing in Dana Point and San Juan Capistrano. While there has been a relativity larger percentage of higher income buyers purchasing larger - higher priced homes, but at sales prices substantially lower then they were 1 year ago.
The major reporting agencies (DataQuick, Banks, Title Companies) have relied upon Averages and Median prices for years since this data is easier to gather then Price per Square Foot, and is also easier for the average consumer to relate too. A newspaper Headline that reads "Average Home prices in Irvine have now reached $800,000" is a lot more eye catching then to say "Average Price per Square Foot in Irvine has now reached $433"... But as can been seen by the above tables, Averages and Medians can offer some very mis-leading conclusions about home prices during times of change in a marketplace.
