HOME SALES HIT FOUR YEAR HIGH

A temporary deadline for a federal homebuying tax break helped boost the Orange County home market last month.

In June, DataQuick says 3,423 Orange County residences closed escrow, up 15 percent from a year ago. And, it’s the busiest June for deal closings since 2006.

The median selling price for all Orange County residences — resales homes and condos plus new homes of all types — sold in June was $445,000. While that was up 6.5% in a year it is also down from $450,000 in May and the fourth month-to-month drop in the past eight months. All told, the median price is up 2.3% in the first half of the year.

However, the recovery looks meager when a historic perspective is applied:
-June buying is 21.7% below the average sales activity of June from 1988 through 2009. (See chart above comparing sales activity of the most recent 12 months compared to their respective 1988-2009 monthly averages.)
-In the 12 months ended in June, Orange County home sales totaled 32,813 – that is 26% below the average sale activity of 44,344 for a year from 1988 through 2009.
-For the second quarter, there were 9,349 Orange County homes were sold — that was 44% above the first quarter. Historically, Orange County sees a 33% sales bump from the first quarter to the second quarter, the heart of the so-called spring selling season.
-However, sales in 2010’s second quarter sales were 24% percent below the 1988-2009 average.

Uncle Sam likely had a hand in this sales bump. House shoppers who entered escrow by April 30 were told they had to close the deal by June 30 to possibly collect up to an $8,000 federal tax credit. Just after the June 30 deadline — which spurred a deal-closing flurry — that deadline was extended by Congress to Sept. 30.

“This is good news, even if part of it is due to stimulus programs such as tax credits and very low interest rates,” says Kerry Vandell, director of real estate studies at the Merage School of Business at UCI. “Consider how we all would feel if, after all the stimulus activity, sales and prices continued to drop. The fact that a broad array of economic indicators — including Wall Street hiring — is pointing toward recovery is a very good sign. However, in the end, recovery will not be complete until job growth in the private sector turns solidly and significantly positive. We are not there yet. However, I anticipate solid job recovery by year end.”

And post tax break, the market is cooling.

Steve Thomas of Altera Real Estate calculates a “market time” benchmark tracking how many months it theoretically takes to sell all the inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic, as of last Thursday, it would take 3.78 months for buyers to gobble up all homes for sale at the current pace. This is slower pace than the 3.37 months of inventory found two weeks earlier or 2.66 months of a year earlier.

Holly Schwartz of Torelli Realty in Costa Mesa concurs, saying her firm sees a drop in activity as tax-break deadlines passed. “The first half of 2010 was strong; the tax credit incentive helped,” she said.

But Carolynn Santaniello of Seven Gables Real Estate hasn’t seen that much buyer drop-off: “I have seen a slow down in the under $450,000 range since the tax credit expired. In the mid and upper range, I have not see as much as a drop in buyer demand. The first half of 2010 has been very busy and I don’t see an end in sight for me, personally. Serious buyers are still buying.”

Information Provided By The Orange County Register