Housing then and now

OC Register columnist Jon Lansner compares the current market with the disastrous 1989-91 stretch and finds, well, some unsettling patterns, starting with this: It's been more than 22 months since there were more OC homebuyers closing deals compared with the previous year-earlier periods. The last time there was such a lengthy losing streak was... right, 1989-1991. Don’t get too nervous – there are big differences between then and now. The earlier downturn was part of a 50-month period where sales fell 40 times. Also, the overall economy is in much better shape than it was in those years. That means more people are working, and if people have jobs, they're more likely to buy homes, right? Plus, there's the different role of homebuilders:

New homes accounted for 20 percent of O.C. home sales during the '89-'91 streak. Builders have had just 13 percent of all home sales in the past 22 months. Builders can play a critical role in any housing slowdown. Since they're in the business of selling homes – and don't have the emotional attachment to a residence that an individual develops – they are often quicker to cut prices to move product. And that discounting can be contagious to other developers, as well as sellers of the existing housing stock. During the '89'-91 streak, DataQuick stats suggest builders were able to keep their pricing in step with the overall market. (Note that the new home median sales price in February 1991 of $256,000 was not eclipsed until November 1997!) Builders are the discounters today. The median new-home sales price is down 10 percent during the current slump vs. a 10 percent gain for the overall market. Builders' reduced clout may explain why their discounting hasn't dented the county's overall median price.