Numbers can be deceiving
Over the past few weeks, I have encouraged readers to look outside of the typical real estate data to determine the health of the Orange County market.
This is important because, contrary to what many in the industry believe, real estate does not operate in a vacuum; its health depends on other sectors of our economy.
When air passenger traffic is up, that helps real estate. When retail sales are up, that helps real estate. And when the Ford Motor Co. reported that it earned its highest profit in more than a decade, that helps real estate.
These indicators are all interesting and important, and there are more of them that relate to real estate, but the straight housing data has tremendous value as well.
For example, MDA DataQuick in La Jolla recently reported the numbers on the final 2010 home prices for Orange County. Overall, the numbers from Seal Beach to San Clemente show health, even though some prices fell last year. That’s because, with one exception, there were no drastic reductions in home prices.
For the seven ZIP codes in the city of Irvine, prices showed a healthy 5% increase; however, one ZIP code, 92618, showed an abnormal 24% increase.
When that is factored out, along with factoring out the worst figure, a 2% drop for ZIP code 92606, the median home price increase is a more realistic 2.6%.
It may not sound like much, but it’s better than going backward.
Huntington Beach did not fare as well. The four ZIP codes saw a 4% drop in home prices. Costa Mesa recorded a 1.5% decline.
Along the coast, Sunset Beach had a 65% drop in prices, but it is important to note that just three homes exchanged hands in the tiny community last year. One of those was owned by Jesse James, the ex-husband of actress Sandra Bullock. The home was originally listed at $6.75 million but sold for $4,5 million on Dec.10, which represents a drop of about 33%. But don’t shed a tear for James: He purchased the 3,600-square foot home in 2002 for $3.6 million.
Seal Beach held steady with a 1% increase over 2009.
In Newport Beach, life is still good. Last year, home prices for the three Newport Beach ZIP codes managed an increase of 15.6%. When the Corona del Mar numbers are included, the average increase drops to 13.7% and drops down to 11.6% when Newport Coast is added. The drop to 11.6% may sound drastic, but perspective is key: Most homeowners would have turned cartwheels to get that in 2010.
Surprisingly, Dana Point and Capistrano Beach each showed a drop of 2% in their average home prices. This is unusual because most of the other coastal communities showed increases with the notable aberration of James and the Sunset Beach market.
Balboa Island was up 7%, San Juan Capistrano, 3% and San Clemente, 1%.
When reviewing the data, it was interesting to note how condominium prices did not always rise or fall in relation to home prices.
For example, while homeowners in Newport Beach were breaking out the Cristal in celebration of the rebound in home prices, condo owners were crying in their beer over an overall 17.3% decrease in prices, with ZIP code 92661 falling a whopping 44.1%.
And San Clemente’s home prices may have dipped 1%, but condo prices rose 1.6%.
If it is a larger context you seek, countywide home prices were up 7.2% over 2009.
There is no lesson or moral here, just numbers. But the numbers are knowledge and if knowledge is power, you are now omnipotent.
STEVE SMITH is a Costa Mesa resident and a freelance writer. Send story ideas to smi161@aol.com.
