Home market continues to soar

Paul Clinton

Even with the rapid appreciation of home values during the past two

years, many local real estate agents say they aren’t worried about a

collapse in prices.

With a nearly unbeatable combination of historically low interest

rates, sparse housing stock and a highly desirable area, coastal

Orange County could well be the envy of the nation.

Buyers continue to flock to an area that has avoided the brunt of

the economic slowdown, agents said.

“We’re kind of in the catbird seat,” said Bob Chapman, the general

manager of Prudential California Realty’s local office. “In any real

estate market, you can find segments of bubbles. The liquidity of

homes has caused [the higher prices].”

Newport-Mesa homes have been selling for steadily higher prices

for at least two years. On Tuesday, the California Assn. of Realtors

reported that homes hit a median price of $448,410 in April in Orange

County. The mid-level home hit $816,250 in Newport Beach and $400,000

in Costa Mesa, the group said.

Historically, low interest rates for mortgages have been perhaps

the strongest driver of rapid appreciation in home values, real

estate sources said. On Friday, the national average for a 30-year

fixed note sat at 5.03%, Bankrate.com reported. A 15-year fixed

mortgage sat at 4.47%. The average rate for a 5-1 adjustable rate

mortgage hit 3.92%.

Low rates have allowed many renters to step up to a condominium or

small house and still afford the monthly payment.

“[Low rates have provided more] buying power through financing,”

Chapman said.

The low rates coupled with a generally weak economy have provided

for a real estate environment unlike any in the past few decades.

Interest rates have not been this low since 1958, Corona del Mar

Chamber of Commerce President Bill Sinclair said.

Economic slowdowns in the late 1970s and 1980s featured high

interest rates that effectively chilled home buying, Chapman said.

Richard Lee, an agent with Coast Newport Properties, has been

selling homes for 33 years and said he hasn’t seen this favorable a

lending environment in more than 40 years.

Lee said he bought his first home in the area in 1967 with a 5.75%

rate.

“It’s pretty amazing,” Lee said. “It’s been a very strong market.”

Rates have been low, but Orange County’s modest economic slowdown

has kept people actively looking for homes. Countywide unemployment

rates, for example, still hang at 3.8%, while statewide 6.7% of

workers are jobless.

Along with the low rates, real estate agents point to the

relatively low number of homes and condominiums on the market. In

Costa Mesa, right now, there are only 60 properties listed on the

market, said Valerie Torelli of Torelli Realty.

“We don’t have enough supply to last three to four weeks,” Torelli

said. “What you have is a $450,000 home sitting next to a home that’s

worth $600,000. That is a beautiful thing.”

* PAUL CLINTON covers the environment, business and politics. He

may be reached at (949) 764-4330 or by e-mail at

[email protected].