Perhaps the best way to analyze the Orange County housing market is to decide which economic camp you belong to: Is the glass half-full? Or half-empty?
Take the latest housing data from DataQuick that shows 5,903 local residences sold in September and October – the traditional start of house shopping’s “offseason.”
• Half-full view: This was the fastest Orange County selling pace for this kickoff to the slower season since 2005. October’s median selling price – $540,000 – was 19 percent higher than a year ago.
• Half-empty view: The sales count was almost flat vs. a year ago – up only 1 percent from 2012. It was 18 percent slower than the post-1988 historic trendline. Orange County’s median selling price has essentially been flat since April.
According to my trusty spreadsheet, prime selling season runs from March through August – a half-year period where 55 percent of a year’s deals closed, on average, since 1988. Orange County homebuying in the rest of the year runs at a 17 percent slower pace.
The offseason typically begins with a back-to-school malaise, followed by the holiday lull and finally the post-holiday blues through Super Bowl weekend. This pattern is no surprise because a key house-shopping demographic – families with kids – fuels the spring-centric prime season with their desire to establish a new home before a new school year begins. JONATHAN LANSNER
How’d that play out in 2013?
• Half-full view: My tallies of DataQuick figures reveal that during the past quarter-century, the offseason slowdown begins with an average drop in Orange County sales pace of 9 percent in September and October vs. the previous six months. Only seven times in 25 years did sales actually jump in this period. So it wasn’t a total surprise that Orange County’s real estate market saw a late-summer sales dip this year.
• Half-empty view: 2013’s offseason started with a larger-than-average 14 percent drop in closings. That sluggishness probably felt worse after a strong prime selling season. March-to-August sales in Orange County ran at the swiftest pace since 2005. The prime season’s sales count was up 9 percent from 2012.
Why did Orange County buyers pull back a bit when the school bell rang again? I don’t want to make excuses for the housing market – it has plenty of built-in cheerleaders to do that chore – but headwinds are swirling.
Mortgage rates are up roughly a full percentage point in a year. With home prices up roughly 20 percent in the same time frame, affordability has been stretched and that prunes the potential buyer pool.
The local economy continues to purr forward. Yet still-tight-fisted bosses keep many workers on edge about employment – not the kind of confidence builder needed to create more homeowners.
Of course, if you forgot, September and October were filled with anxiety surrounding another round of Washington-styled, delusional crisis creation.
The resulting 16-day partial government shutdown last month may have mucked up the closing of a few mortgages. But the real victim – other than federal workers’ work schedules – was the overall consumer psyche. Did we need to risk the U.S. skipping debt payments and an ensuing global financial nightmare just to settle a few political points?
While it’s impossible to quantify the impact of long-running, ugly budget battles on local housing, the half-empty view is that D.C. insanity adds to reasons why a house shopper should gulp. The half-full views notes that Orange County homes haven’t sold this briskly in eight years. That’s not shabby in light of all the year’s yammering about fiscal cliffs and the like.
I wonder if many people still see the purported high-stakes political poker games as serious economic threats. Housing isn’t the only business metric that has done fairly well this year.
Sadly, housing’s half-full vs. half-empty debate will likely witness more political drama in the coming months. Remember, the truce ending the last phony D.C. crisis simply created more fodder for another fiscal tightrope walk just after New Year’s.