Our previous blog article ( The Orange County Real Estate Market is Alive Again ! ) caused a bit of controversy, so I thought I would further clarify and elaborate on the previous report... Someone commented on that previous blog post that I'm calling for a 'Recovery' in the local Orange County real estate market... I never used the word Recovery for in my mind a recovery is a return to last summers peak in pricing and I do not see that occurring this year or next year... What I did say, is that I see an end to price reductions, which in other words, I'm estimating that we have reached the bottom of the market with regard to price reductions (or very close to the bottom)...
Let's dive into the details of home pricing... but some background first. The home price figures that many of the newspapers and large banks quote are based upon Quarterly, 6 month or Yearly data of either the Average home price or the Median Home price. They then usually compare this to the same time period of last year. The problem with this approach is two fold... One, there is an inherent lag due to the long averaging period of 3, 6 or 12 months coupled with the fact of comparing those averages to 1 year ago.. Two Average home prices can be skewed by a few high price sales, and both Median and Average home prices can be skewed by home owners opting for larger or smaller homes as demographics change.
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