Real Estate Experts Expect Riot to Harm Valley Market
Los Angeles is only beginning to sort out the aftermath of riots and looting that have scarred the city and jarred all of its residents.
The fallout could include serious harm to Valley real estate values. It’s too early to tell just what the long-term effects will be, but the consensus seems to be that the riots will only add to the region’s residential and commercial real estate malaise.
“I think there’s been a wake-up call,” said Ira Gribin, past president of both the California Assn. of Realtors and the San Fernando Valley Board of Realtors. The fate of real estate values is “going to be totally dependent on what ends up happening,” Gribin said. Civic leaders will need to respond to the causes of the L.A. riots. “If we don’t do anything, homeowners will be lucky to keep up with inflation.”
Fixing L.A. isn’t an impossible task, Gribin said. Glendale and Santa Monica were both considered cities on the skids just a few years ago. Now they’re being held out as models for self-improvement.
“People can’t continue to escape to farther-out suburbs and pretend everything is OK,” said Gribin, who now spends his time as an expert witness in real estate cases. “If you intend to sell your home, you’re going to be affected. You can’t live in a vacuum.”
There isn’t yet hard data to prove that the riots will depress real estate values, but “there’s no way that it can have anything but a negative impact,” said Wayne Scott, owner of American Real Estate Appraisal in Canoga Park. His initial impression is that some areas might incur up to a 5% loss in value. Other real estate observers have been estimating anywhere between no effect and a 20% loss in value.
Communities in the San Fernando Valley seemingly suffering the most from the L.A. riots are Panorama City, Pacoima, Arleta, Lake View Terrace and Sylmar, where a roving crowd of about 200 broke windows and looted stores. There were also demonstrations at the Foothill Division Police Station in Pacoima, where the four officers who beat motorist Rodney G. King were assigned. In Lake View Terrace, near where King was beaten, a crowd threw rocks and bottles at passing motorists. And there was a drive-by shooting linked to racial unrest in Mission Hills.
Each of these communities--along with others such as North Hills and Canoga Park--have already been suffering from increased gang activity and a perception by some home buyers that these neighborhoods aren’t as safe as they used to be.
“People are already making panic listings in Panorama City. It’s really taking a beating,” said Mary Lou Mattli, an agent with Century 21 Post Realty in Panorama City. She just listed a home in Panorama City for $159,000. After the riots the owner became so anxious to sell that he ordered Mattli to cut the price $15,000 to $20,000 if there are no offers within two weeks. “They just want to get the heck out,” Mattli said.
“There are very few white buyers,” Mattli said, and “the elderly folks don’t feel very safe.” The news, however, isn’t all bad. Mattli is getting calls from residents in central L.A. who consider the East Valley a welcome haven from their neighborhoods. “For them,” Mattli said, “this is pretty good.”
For the long term, Scott said, aerospace layoffs will prove more detrimental to housing prices in the Valley. The loss of well-paying jobs will be felt for a long time, he said.
For now, however, the recent state of emergency is prompting home buyers to ask more questions about security and crime, Scott said, and communities such as Thousand Oaks, Newbury Park and the whole Santa Clarita Valley could become even more popular as a result, he said.
Gated communities are another big selling point, Scott said. Gating your street or neighborhood can add 10% to 20% to your home value, he said. “As soon as you put the gate up, the value really goes up.”
“Twenty years ago we didn’t have gated communities,” said Chuck Lamb, president of the California Assn. of Realtors and owner of Century 21 Lamb Realtors in Northridge. But today, “people are looking for more security,” he said.
“The Watts riots were confined to that community. There was never a feeling that it was going to spread out,” Lamb recalled. In 1992, however, “those who thought they were safe realized they’re not.”
The West Valley might well become more valuable than it is now as a result of the rioting, Lamb said. As residents of the East Valley and other parts of L.A. seek to isolate themselves from crime, “we expect our own sales to increase,” Lamb said.
“There’s been some speculation that so-called ‘edge cities’ will benefit as people move to the perimeter of Los Angeles,” said Jeffrey S. Meyers, president of the Meyers Group, a real estate information and consulting firm with offices in Encino. “Unfortunately, I think racism is a factor in home buying. The more expensive the home, the more of an issue it is.”
“Homes farther to the north, as far as Santa Clarita, and west will be more valuable,” speculated Steven Nemeth, comptroller at Exclusive Realtors Co. in North Hollywood. He also observed prospective buyers at several recent open houses asking more questions about crime and security. “There’s definitely a concern,” he said, “but it’s too soon to know what the effects will be.”
