New Home Tab Up to $364,550 This Year : But Sales Drop Nearly a Third in More Normal Market, Firm Says

The average price of a new, detached house in Orange County soared to $364,550 during the first 3 months of 1989, while sales of new homes dropped by nearly a third, according to a Costa Mesa consulting firm.

The average price calculated by Market Profiles was 45% higher than the $251,636 recorded during the first quarter of 1988. Condos and town homes averaged $184,901 during the first quarter this year, up 30% from $142,060 a year earlier.

The consulting firm said that 1988 was an exceptionally good year for sales, so the decline in sales activity represents a return to a more normal market.

Builders sold 2,426 houses and condominiums during the quarter, the firm reported, down 31% from the first quarter of 1988, when 3,484 were sold.

Sales of attached housing, including condominiums and town homes, fell 41% to 981 units this year from 1,655 a year earlier. Sales of single-family houses fell 21%, to 1,445 this year from 1,829 in 1988.

Attached housing represented 40% of total sales during the first quarter, Market Profiles said.

There were slightly fewer homes on the market this year, the consulting firm said, and that may have contributed to the drop in sales.

The most expensive new houses continue to sell well, S. Kelly McDermott, vice president of the firm, said.

Subdivisions with homes priced from $300,000 to $600,000 can expect to sell an average of three units every 2 weeks, according to Market Profiles.

The firm said that even projects with houses priced above $600,000 can expect to sell one every couple of weeks.

Developers have been building more townhouses in recent months because the price of detached, single-family homes has risen beyond the means of many county residents, McDermott said.

“There’s a hole in the market for housing priced between $150,000 and $300,000, and the builders are starting to fill it with bigger and more luxurious attached housing,” she added.

Buyers of those units tend to be families with children who are moving up from smaller condominiums, McDermott suggested.

And as the detached-housing market has become less affordable, a shortage of inexpensive condominiums for first-time buyers has developed, McDermott said.

Those people will continue to rent, she said, and developers are likely to adjust by building apartments with more bedrooms.

According to Market Profiles, builders in the first quarter were planning to construct 37,000 new housing units over the next few years. That was down from the 40,000 planned during the same period last year.

But barring unforeseen circumstances, no appreciable slowdown in housing construction appears likely, McDermott said.

In the market for resale homes, sales have also declined this year compared to last. In February, the latest month available, sales were down 4% from a year earlier in Orange County, the California Assn. of Realtors reported recently.