After owning four houses, Debby Wilson had her fill of yard work and home repairs.
When the 57-year-old banking executive moved from Virginia to Orange County, she bought a two-bedroom unit on the 11th floor of the Plaza Irvine condo tower.
Condo prices vs. house prices
The median price of an Orange County condo was $380,000 in July and the house price median was $611,000. Here’s how condo and house prices have fared over time:
|Period||Resale houses||Resale condos|
|Change from July 1988||+214%||+199%|
|Change from 2000||+109%||+117%|
|Change from 2005||-9%||-13%|
|Change from Peak||-17%||-18.7%|
|Change from Bottom||+46.1%||+52.0%|
Note: House prices peaked in June 2007, then hit bottom in January 2009. Condo prices peaked in May 2006, then hit bottom in February 2012.
Source: DataQuick Information Systems
The condo also had an added benefit Wilson hadn’t expected: a whopping 37 percent price jump. A year after her April 2012 purchase, a similar unit on a lower floor sold for $265,000 more than she paid for hers.
“It’s gone up quite a bit,” Wilson said of her home’s value. “I’ve bought and sold enough houses to know you don’t count those pennies until you sell. … (But) I feel like I made all the right decisions.”
Condos are turning out to be a good decision for other Orange County home shoppers as well.
For more than a year, the Orange County housing market has been hot. The condo market, however, is hotter.
Condo prices have increased 27 percent in the year ending in July vs. 19 percent for houses, according to DataQuick Information Systems. July’s median price was $380,000.
Condo prices jumped 52 percent since they hit bottom in the housing crash, vs. 46 percent for houses.
Condos made up 36 percent of homes for sale last month but 42 percent of the homes going into escrow, according to Steve Thomas of ReportsOnHousing.com.
The average amount of time it took to sell a condo was 66 days in July, vs. 75 days for houses, multiple listing service figures show.
“Prices have increased significantly from two years ago, and there has been a surge in demand for this type living, leaving little available for sale,” said Newport Beach broker Veronica Hicks of Condos Etc.
Demand is higher because condos are cheaper, local agents say. They’re also popular with investors and foreign buyers because they’re easier to rent out and often have security gates.
“There’s just more buyers in that price range,” said Grant Doelp of Red Fox Properties in San Juan Capistrano, who represents investors, many of whom have bought condos. “There are more people who can afford to buy that $150,000 to $250,000 home.”
History shows that Orange County condos have bigger price swings than houses.
Pat Veling, president of Real Data Strategies, a Brea property consulting firm, said houses are preferable for those who can afford them. Condos often are hit sooner in troubled markets and take longer to recover, he said.
“From an investor perspective, for whom timing is critical, condos are often not the best investment,” he said.
But over the long haul, Orange County condo prices tended to rise and fall in tandem with houses over the past 24 years, DataQuick figures show. Both condo and house prices have tripled since 1988, with house prices up 214 percent and condo prices up 199 percent.
“Over the long term, residential real estate is residential real estate,” Veling said. “For the resident with a long-term horizon and who can be flexible, condos turn out to be as good as single-family homes.”
Many buyers opt for condos because they can’t afford the steep price of a house or because they prefer the maintenance-free lifestyle and amenities condos offer, agents say.
“The reason condos are hotter is they’re more affordable,” said Todd Muradian, owner of Aspero Realty in Irvine. “Nobody wakes up in the morning and says, ‘I want to be attached to my neighbor.’ But they do wake up and say, ‘My wife just had a baby and I need a three-bedroom under $500,000, and I don’t want to drive to Riverside County.’ ”
Despite the increase in demand, developers are building fewer condos this year because they’re more expensive to build than houses, said housing consultant Mark Boud of Real Estate Economics in Irvine. But rising prices are likely to trigger more condo development next year, he said.
“In the current market, less supply has resulted in greater price pressures on condos than on (single-family homes),” Boud said.
Dr. Ying Chi, an orthopedic surgeon, said she loves the three-bedroom, four-level townhome she bought last year in Irvine’s Central Park West development because it’s low-maintenance and secure.
She paid $589,000 in January 2012, sharing the 2,256-square-foot unit with her fiance, Milo Benigno, and their 115-pound Akita, Charlie.
The one drawback is having to abide by homeowners association rules, said Chi, 37. For example, barbecues aren’t allowed on decks.
On the other hand, the condo is close to John Wayne Airport, and it’s easy to take off whenever she wants to get away.
An unexpected bonus: The corner unit four doors away is for sale for $240,000 more than she paid, a 41 percent increase in 19 months.
“So, I’m happy,” Chi said.
Debby Wilson said she spent about a year shopping for her condo, often getting outbid by cash offers from other buyers.
She paid $725,000 – $10,000 more than her original offer – after looking exclusively at condos. Her 1,700-square-foot unit came with granite countertops, Viking appliances, and wood paneling on her refrigerator and dishwasher.
“I felt like I was missing the market,” she said. “And then, it looks like I hit it at the bottom (of the market).”
Wilson shares her home with her 28-year-old son Eliot, who is staying with her while studying for his real estate appraiser’s license, and Twitter, her Yorkshire terrier-poodle mix.
She misses the storage space she used to have in her houses for such items as Christmas and Easter decorations.
“But I love it,” she said. “If I have to leave for a vacation or business trip, I don’t have to worry about someone picking up the newspapers or checking the pipes.”