Why Orange County’s Median Price May Fall Under $400,000

It’s a long way to fall I know. From our ‘07 high – well over $600,000 – to our median home price as of July ‘08 at $460,000 (according to DataQuick). As tough as that is to swallow, we may still have a ways to go.

Here’s a picture of the Southern California Real Estate market and the proverbial bubble bursting.

Southern California Home Prices

It’s interesting to note where we are in the ‘burst’ in each of the counties of Southern California.

Orange County’s (Dark Green) current median home price is $460,000, January 2004 pricing.
Los Angeles County’s (Dark Blue) current median home price is $400,000, May 2004 pricing.
San Diego County’s (Purple) current median home price is $365,000, April 2003 pricing.
Riverside County’s (Light Blue) current median home price is $260,000, June 2003 pricing.
San Bernadino County’s (Red) current median home price is $229,750, March 2004 pricing.

If Orange County were to fall to levels of early 2003 prices as we have seen in San Diego and Riverside County, that would put us well under the $400,000 point for the median home price. Is this a likely scenario? I think it’s very possible given the current mortgage market, stiff lending guidelines, and the continued influx of distress properties onto the market. Stay tuned….

Update September 12, 2008: According to an article posted by Lansner this morning, as of August 26, Orange County is at a median home price of $440,000, which is $20,000 less than what I posted in this piece a week ago (my numbers were based on July). It’s down 31.5% from one year ago. This puts Orange County at November 2003 pricing.

As I’ve said, there’s no big turnaround on the horizon so if you must sell – reduce your price and move your property. If you’ve wanted to sell to get a bigger home, this is a great time as long as you are willing to let go of the price that you had hoped for on your sale. It doesn’t exist. Price it right or rent it out.

If you are a buyer, the good news is that rates are coming down with prices. You may not be able to predict tha market bottom, but there are some opportunities that are golden out there. If you are looking for a home and don’t plan on selling for at least 3 years, it may be worth taking a look.

If you don’t have to sell – don’t.