Housing market continues to gain equity

Local homeowners can again be glad they chose to settle in

Newport-Mesa. A new round of statistics showed home prices rose yet

again in most of the area.

The figures, which tracked August home and condo prices, were

released Monday by DataQuick Information Systems, a La Jolla-based

company that tracks real estate prices. Compared with August of last

year, the only neighborhoods where home prices dipped was in the ZIP

Code that includes Newport Heights and West Newport. The

year-over-year drop was a paltry 1%, bringing those neighborhoods

home prices to $880,000.

Compared to July 2005 prices, median prices in those neighborhoods

went down by about $120,000. The only other area where home prices

dropped from July to August was south Costa Mesa. There, the July to

August dip was only about $20,000, and the area recorded median

prices of $707,500.

In Balboa Island, the median home price was reported as being a

little more than $2 million. Year-over-year price comparisons for the

island were not given, and figures on the area were not released in

July.

In Newport-Mesa, August’s biggest price jump was in the ZIP Code

that includes Balboa Peninsula Point. DataQuick reported median home

prices in that area were $3.1 million, a hefty increase above July’s

median price of about $1.8 million.

In the six-month period between March and August, median home

prices in that area fluctuated in a range between $1 and $2.2

million. Typically, the volume of home sales in that area is small --

DataQuick reported five sales for August -- which makes it possible

for the sale of a very high-end property to push numbers skyward.

In the long run, Realtor Sally Martin said the trend of people

tearing down older properties and building more upscale homes in

their place is propping up prices in the area.

“We’re seeing prices we haven’t seen there before,” she said.

Over time, continued upward pressure on prices across Balboa

Peninsula could change the area’s image.

“As the prices go up, you’re going to find less and less young

people being able to live and party there,” Martin said. She said

rental rates on the peninsula tend to go up at the same time as home

prices.

Concerning the future, G. Christopher Davis of UC Irvine’s Paul

Merage School of Business said the home market could settle down in

the next few months. He said August is often strong, since its home

buyers’ last chance to buy a home with a 30-day escrow and move in

before their children have to start school.

To an extent, Davis believes the recent surge in home prices is

fueling itself, as buyers can take advantage of their homes’

appreciation to move into more upscale digs. He does not believe

Orange County’s home prices are floating on a bubble, though he is

concerned for home buyers who purchased their houses with an

adjustable-rate mortgage. If rates go up, those people could be in

for a rude awakening.

As of Sept. 8, mortgage giant Freddie Mac reported the average

rate for a 30-year, fixed-rate mortgage was 5.71%, plus a fee of 0.6

points. Rates for 15-year fixed mortgages averaged 5.3% and 5-year

hybrid adjustable-rate mortgage rates averaged 5.24%. Fees for those

mortgages were also 0.6 points. Average rates on 1-year

adjustable-rate mortgages were 4.45% with a 0.7 point fee.

“I counsel anyone who asks me, they ought to get out of their

adjustable-rate mortgage now if they’re going to live in their house

for more than three or four years,” Davis said.

* ANDREW EDWARDS covers business and the environment. He can be

reached at (714) 966-4624 or by e-mail at

[email protected].