REAL ESTATE : County’s Home Prices Show a 5% Dip, but TRW Says It’s No Cause for Alarm

Home prices fell 5% in Orange County in November, the largest drop in more than a year.

The average price of a home was $246,588, the lowest it’s been since March.

But homeowners shouldn’t panic yet, according to TRW Real Estate Information Services, which compiles the figures. The statistics don’t necessarily mean that homes are depreciating.

Part of the price drop can be explained by the fact that people are buying more condominiums, which are generally less expensive than detached houses. The presence of a lot of condos in the sale figures tends to lower the overall average price.

More than 1,000 condos were sold in November, up from 653 in October. Unlike other surveys, TRW’s includes both condos and detached houses. It also surveys both new and resale homes.

There’s a simple explanation for why condo sales are booming. Detached houses are so expensive that fewer than one in seven local families can afford them. So buyers turn to the less-expensive condo market.

But part of the price drop must be blamed on a softer market. Sales are cooling off this year, compared to last: In November, for instance, only 4,161 homes were sold, down 6% from last year’s 4,424 in the same period.

And that decline is small compared to the entire year. Through November, home sales were down 25%--to 42,555--compared to 56,869 last year.

That might seem like disconcerting news, but last year’s market was considered exceptional. Nearly every home that came on the market was snapped up, and prices went through the roof.

By contrast, this year’s more normal sales figures look somewhat paltry. And price increases consequently have slowed. Where some homes increased by a third or so in price last year, November’s $246,588 average price was up only 9% from last November’s $226,534.

Barring a recession or some other disaster beyond the county’s control, prices will probably continue to climb, but more slowly than during last year’s buying frenzy.

The drop in price that occurred between November and October, then, is “probably just a temporary blip, and not a trend,” says a TRW spokesman.