Real estate appraisers are raining on Orange County’s parade. CoreLogic reported a median home selling price of $645,000 in April, marking a return to home values not seen since June 2007. But one group of local appraisers say Orange County still has a ways to go before home prices beat the previous peak.
The Real Estate Research Council of Southern California is a group of real estate analysts and professionals based out of Cal Poly Pomona. Every six months, the RERC sends out volunteer appraisers to evaluate a fixed sample of 39 homes in Orange County and 269 other homes across the seven counties of Southern California.
The RERC’s methodology tries to filter out the noise that comes with measurements based on closed home sales. Median selling prices can be affected by bidding wars, while appraisals are a more-sound assessment of a home’s actual value. Although the RERC’s appraisal index uses a much smaller sample than CoreLogic’s analysis of 3,285 homes in Orange County, it’s still a useful tool to track home values.
The RERC’s appraisal index increased 5.4 percent in year ending in April. That amounts to a 35 percent turnaround since Orange County’s real estate market bottomed out four years ago. But the appraisal index is still nearly 10 percent below the peak hit in October 2006.
Part of the reason why appraisal values have yet to exceed the peak of ten years ago is because lending standards have tightened. The easy money of the pre-crash period drove up appraisal values in more affordable neighborhoods and increase the average home value. Lower-priced communities saw the most outrageous valuations and have been the slowest to recover, which is bringing down the average appraised home value in Orange County, according to RERC’s survey.
Overall, Orange County home values increased by 250 percent in the 10 years prior to October 2006, only to fall by 32 percent in the following three years. Since then, the rebound has not created a level playing field.
The RERC’s appraisal index shows that homes in Orange County beach communities have an average value of $811,529. That marks a nearly full recovery, just 3 percent short of their appraised values in October 2006. In Central Orange County, on the other hand, the average appraisal value is $596,556, which is still 11 percent below the October 2006 peak. In the northern part of the county, the average appraisal value is $539,077, about 14 percent short of the October 2006 peak.
Only homes in the priciest and most exclusive Orange County neighborhoods have managed to make a full rebound, while in the more affordable areas of the county homes are still stuck with appraisal values that are about 10 percent lower than October 2006. The main conclusion of RERC’s survey is that the recovery is only close to complete in the most expensive real estate markets.
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(all data current as of 5/25/2017)
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