Retracing the housing bubble: 1997
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As promised, the blog is retracing the housing bubble in hopes of better understanding where we are today and how we got here. This is not meant to be a definitive history, but a rough outline for discussion. I’ll likely add to these posts with more information, anecdotes, and statistics, partly at your suggestion.
1997: The housing bubble begins to take shape in Southern California as median home prices slowly begin their long rise. In celebrity news, the L.A. Times’ Hot Property reports that Brad Pitt (pictured) has bought a two-bedroom, 2,200-square-foot house in the Hollywood Hills for about $400,000.
According to DataQuick’s tracking of median sales prices in Southern California, prices bottomed at $146,000 in January of 1996 and again in February 1997, ending a five-year slide. Prices across the region then began a historic, 10-year rise, peaking at $505,000 in March of 2007, a rise of 246%. Had prices over that period only matched inflation, as measured by the consumer price index, median home prices would have peaked at about $189,000 in 2007.
1997 at a glance: Median sales prices rose $12,500, or 9.8%; inflation that year, as measured by the CPI, was 1.7%.
Month SoCal median sales price % change y/y %change from bottom
Jan. $147,500 1.0% 1.0%
Feb. $146,000 -1.0% 0.0%
March $152,500 1.6% 4.4%
April $152,000 1.3% 4.1%
May $155,000 2.6% 5.5%
June $156,500 2.0% 7.2%
July $155,000 2.0% 5.5%
Aug. $159,500 4.6% 9.2%
Sept. $160,000 5.3% 9.6%
Oct. $158,500 5.7% 8.6%
Nov. $160,000 6.7% 9.6%
Dec. $162,000 8.0% 11.0%
Your thoughts? Suggestions? Insights? E-mail story tips to peter.viles@latimes.com.
More on Brat Pitt: The home Pitt bought in early 1997, fresh from proposing to Gwyneth Paltrow in Argentina, was the third he had purchased in the same gated enclave.
Photo Credit: CP.