Orange County Realtors Bite Bullet, Back Tax Hikes
Stalled home sales are ammunition for those proposing a tax increase to help drag wealthy, anti-tax Orange County out of bankruptcy and keep it among the nation’s most desirable addresses.
“The Realtor groups say, ‘We’ll walk the streets for this because our buyers have gone cold,”’ says county Chief Executive William J. Popejoy.
Popejoy maintains that property values, along with schools and public services, will decline unacceptably unless the sales tax is raised by a half cent, to 8.25 percent.
A $1.7 billion investment loss forced Orange County into bankruptcy last December. This month, it struck a deal to repay 200 agencies that invested funds in its treasury.
But the struggle continues to perfect a recovery plan that includes cutting county spending more than 40 percent, mostly by firing workers; selling at least $100 million in county property; getting bondholders to extend repayment dates; raising dump fees, importing trash - and raising the sales tax for 10 years to finance $750 million in new borrowings.
Statistics show the effects of that uncertainty.
In the first quarter of this year, total sales of houses and condominiums were 23.5 percent lower in Orange County than a year earlier, according to John Karevoll, financial editor for the Dataquick real estate information service.
Severe winter weather and higher interest rates were factors, Karevoll said. Still, it was nearly four times the decline in adjoining Los Angeles County, and the reason is simple.
“You’ve got to be circumspect in a market like this,” would-be home buyer Jeffrey Johnson said Tuesday.
Johnson moved with his wife, Ann, and two youngsters from Connecticut in January for business reasons. They have reason for caution. The 30 homes they have looked at, mainly in the resort and art colony of Laguna Beach, list for $500,000 and up; a mistake could cost them dearly.
The caution shown by home buyers helped make Orange County the toughest real estate market in the country during February and March, said Chandler B. Barton, president of Orange County-based Coldwell Banker Corp., a real estate brokerage with 2,400 offices and 54,000 agents in North America.
Barton and other agents provided anecdotal evidence that buyer interest has picked up in the past two weeks. And he says he’s confident that 1995 will still be a good year - assuming there’s a solution to the county’s problems.
“I personally think that Orange County has bottomed out,” he said.
© Copyright 1995 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.