Saturday, June 2, 2018

Orange County, CA Housing Market Resumes Upswing after Extended Consolidation

- Intended for Students/New Analysts to Learn Analytics -

(Click on the image to enlarge)

The primary Median Sale Price chart exhibits a sharp growth followed by a very noisy and volatile price pattern, with a slightly declining trend. While both trendlines are rejecting the extreme volatility, they are however confirming the downward movement. In order to buck the current trend, Orange County has to stay above the $735-$740K soft support. Since this is primarily a 'Jumbo' market, the rate environment will perhaps dictate terms going forward, forcing nervous buyers (fearing continued rate hikes would price them out of the market altogether) and sellers (sitting on the fence for further price escalations) into the mix. 

The normalized Price per SF trend (bottom chart) portrays a very different picture, indicating a steady rise in price. The trend remains bullish due to three classic reasons: a) steady initial growth, b) upward sloping extended sideways, and c) break-out of the congestion. While the prices upwardly congested between $400 and $410/SF, it recently broke out of the congestion. Of course, both trendlines are projecting a more moderate break-out. The reason the linear trend has a moderate r-squared of.813 (rather than customary > .90) is that the growth angle is somewhat tepid, i.e., less than the perfect 45 degree.
- Sid Som, MBA, MIM
President, Homequant, Inc.

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