Hot December for Home Sales in Southland

Southern California home sales surged in December--usually a so-so month--capping a solid year of recovery for the housing industry.

The median home price last month rose 6.7% from a year earlier in Los Angeles County and a whopping 10.3% in Orange County.

More homes sold in Los Angeles County in 1997 than in any year since 1990, Acxiom/DataQuick Information Services analyst John Karevoll said Monday. Using data that include all but the last 3 1/2 days of the year, Karevoll projected total sales of houses and condos at 94,623, up 9.3% from 1996.

Los Angeles prices rose as well. For the year, the median price in the county was up 4.9% to $170,000.

“The move-up market and the luxury market have clearly rebounded, and it is not an aberration. We’ve been seeing the upturn for a solid year now,” said Edward Zinke, vice president of sales for Braemar Group of Agoura Hills.

Braemar, a builder of high-end homes, diversified into less expensive work during the real estate recession, including a redevelopment project in Pico Rivera. But its next two projects will feature million-dollar homes in Calabasas and Tarzana.

In Orange County, where final figures were in, 1997 home sales jumped by 14.4% to 41,739--also the highest number since 1990. The median price for the year climbed 4.2% to $200,000, according to the DataQuick figures.

Karevoll said Orange County began the year slowly but now is starting to resemble the ultra-hot markets in Silicon Valley. In December, typically the sixth-busiest month of the year for home sales, Orange County recorded its second-highest sales volume of any month in the 1990s.

The demand pushed December home prices to a median of $215,000, the highest level in Orange County since September, 1992. The price was up 10.3% from $195,000 in December 1996.

A surge in consumer confidence, combined with a dwindling supply of ready-to-build lots, drove up prices of new homes in Orange County by 19.3% to $284,000 last month, the highest median price on record.

The strong home sales in Los Angeles and Orange counties were attributed to a trio of factors--mortgage rates in the 7% range, regional economic growth and pent-up demand from baby-boomer homeowners who had postponed “trade-up” purchases during less rosy times.

Sales and price increases were especially strong in areas where workers in the entertainment and high-tech industries live.

“I’ve got four homes in escrow right now, which is amazing,” said Deirdre Daniels, regional director for the Fred Sands Estate Division in Brentwood. “Usually in January, everybody goes skiing.”

Many builders are also celebrating the new year. Lewis Homes, an Upland-based builder with moderately priced projects throughout Southern California, recorded strong sales during the New Year’s Day holiday, a normally dead period, said Randall Lewis, the company’s marketing director.

At a Lewis project in La Verne, for example, about a home a week had been selling, but three sold over the New Year’s weekend, Lewis said.

“People think that the market prices have bottomed out. And they think mortgage rates are amazing,” he said.

Cary Bren, chief executive of Orange County’s California Pacific Homes, also reported good sales during what’s usually a slow time, adding that “the indicators are there” for a strong 1998.

“Historically, we see more [sales] after the Super Bowl weekend, and December is slow. But this December was a good month. We sold 28 [homes] for the month,” Bren said.

Despite the recovery, prices in most Southern California neighborhoods remain far below their peaks of eight years ago, and lower-priced areas tended to show lower increases. “We’re not seeing appreciation where the bulk of the population lives,” said Huntington Beach broker Pat Neal.

“And the middle-range homes have a long way to go still to get back to where they were in 1990.”

Because a greater percentage of recent sales have involved larger, more expensive trade-up homes, the median price figures somewhat exaggerate the price escalation.

Karevoll said he believes home values in Orange County actually are increasing about 7% and will continue in that range through early spring, while the increases for Los Angeles County average at about 3% or 4%.