Let's look at the price and sales data. We have been gathering market data on a weekly bases since July of 2002' Since we began gathering this data, we are now at a point of the largest number of homes listed on the market for sale at 4,597. As an interesting comparison, south orange county had just 500 homes on the market for sale in February of 2004’. Also, at that time (February 2004’) there were about 1,500 homes sold in escrow, whereas today there are only 763 homes sold in escrow.
There have been some new recent articles quoting a recent Dataquick report, that the Median Price of homes in Orange County has only dropped by $1,000 from April of this year compared to April of last year, which represents just about a 0.15% drop in prices, which essentially is no drop in prices at all. That calculation may be true, but if you have been active in selling real estate in this market, like I have, you know this not to be true, so how can this be ? Our data gathering and analysis give us the answer.
Dataquick basis there estimates on
Median home prices which is the price in the middle in which half the homes sold
for a higher price, and the other half sold for a lower price. This calculation
compares small low priced entry level homes, with larger multi-million dollar
ocean view estates, and everything in between. Our graphs have shown that for several years, the sub $400K market was always
the hottest market with the lowest months of inventory. But in the past 5
months or so, this has not been the case, and now the sub $400K is one of the
softest markets with one of the highest months of inventory (currently at 9.8
months). What this tells us is there are now more buyers purchasing larger and
higher priced homes as compared to lower priced entry level homes. This
phenomenon then skews the Median Price (and Average Price) calculation to the
higher end of the price spectrum.
According to our calculations which looks at
price per square foot for specific product types, prices have actually dropped
about 10% nominally since the peak in pricing in May of last year… I predict that this softness in the market will continue throughout the remainder of this year and begin to strengthen next year.
