By JONATHAN LANSNER / THE ORANGE COUNTY REGISTER
Feb. 14th 2013
Here’s a little statistical nugget you may have missed about Orange County’s recent homebuying spurt: The number of residences sold in January was 20.8 percent lower than the previous month.
That decline is actually good news.
You see, homebuying — at least, official closings as tracked by DataQuick — traditionally slips after New Year’s. Yes, no bang to housing’s kickoff.
For one, many of the transaction-paid players in the real estate game like to close deals before a calendar year ends to meet various goals, incentives and quotas. And some sellers and buyers don’t mind closing before the year is out for either tax reasons, or to meet a need to have a new home before a year gets going — say, to get a kid into a new school.
So a year-end push for December sales counts is all-but inevitable.
Once the ball has dropped, the champagne stops flowing and the Rose Parade is completed, the reality of a New Year hits. For home selling, January’s typically a bit of a respite for deals being finished.
Comparatively, not this year.
Orange County shoppers bought 2,431 residences last month, DataQuick says. That was 30 percent higher than 2102’s start. It was the fastest-selling January since 2006. And 2013’s opening month’s Orange County sales pace was just 4 percent below the average sales counts for the first month of a year in the past quarter century. That’s an improvement because it was not too long ago that sales were running 20 percent to 30 percent below historic norms.
Another way to look at the speed of the start of 2013 is to ponder the scope of the typical year-opening drop. Yes, the year starts with a sales drop — or at least DataQuick’s history shows that it’s happened 25 out of 25 times since 1988.
This year’s starting closed sales in Orange County were off 20.8 percent from December’s closings. That’s roughly one-third smaller than the historic drop that’s averaged 31 percent in the last 25 years. Only three years since 1988 — 2002, 2007 and 1991 — started the year with smaller declines vs. December than 2013.
I’m usually no fan of analysis based on one-month of data compared to the previous month’s trend.
Be honest: it’s an awfully short period — too many variables, serious or not, can slip into the math. Plus, even in data sets where attempts are made to “seasonally adjust” the numbers, traditional fluctuations always seem to creep in.
To overcome a human tendency to overanalyze short-run movements, deeper perspective becomes critical. So when pondering the beginning of a year for local housing — remember that a slow start vs. year’s end is the norm.