It’s Hot December for Orange County Housing

Orange County’s housing market, careening at a frantic pace throughout much of 1998, capped its strongest year in a decade with a flourish in December, as home prices equaled their all-time peak and sales hit their highest level in 10 years.

The median price--the price at which half the homes sold for more and half for less--climbed to $236,000, up $7,000 from November and 9.8% above the price a year earlier, Acxiom/DataQuick Information Services, a real estate research firm, said in a report issued Wednesday.

A total of 4,330 homes and condominiums sold in Orange County during the month, the highest sales for any December since 1988. Sales were up 4% from a year earlier, marking the 33rd time in 36 months that sales have increased year over year.

“It didn’t slow down over the holidays,” said Patrick Knapp, an agent at ReMax Real Estate Services in Newport Beach. He said he received an average of 20 inquiries a day during the holidays, compared with two or three a day in previous years, as low mortgage interest rates apparently prompted buyers to act before prices move even higher.

For the year, the median home price rose 13% to $226,000, the most rapid increase in Southern California, said John Karevoll, an analyst for Acxiom/DataQuick who compiled the report.

Indeed, 1998 marks the year when Orange County’s housing market completely bounced back from its prolonged slump earlier in the decade.

Sales for all of 1998 hit 50,027 units, a 20% gain over 1997 and the highest level since 1988. The hectic sales pace mirrored a national trend.

An estimated 4.8 million units sold nationwide last year, according to the National Assn. of Realtors, the highest level since the organization began tracking sales in 1968.

Some observers say the surge will continue.

Karevoll predicted median price in Orange County will climb to $265,000 this year.

“It would take a major event of some magnitude to change things,” he said.

The county’s tight labor market will boost incomes and keep housing demand high, said Mark Zandi, an economist with Regional Financial Associates in Pennsylvania. Prices will also continue to escalate because home construction will not meet demand, he said.

If the stock market stays strong and interest rates remain low, “we could see another double-digit gain in Orange County’s housing prices next year,” Zandi said.

But other economists are skeptical. James Doti, president of Chapman University in Orange, who has helped compile a countywide forecast for 20 years, predicts growth will slow this year to a walk from a sprint, mostly because of continuing economic turmoil in Asia, Orange County’s largest trading partner.

He expects prices of existing homes in the county to rise at a 5% rate in 1999.