Home Values Head for New High
Home values in California will surpass their pre-recession peak sometime next week as a strong economy and a house-buying boom push up values at a rate of $12 billion to $15 billion per month, according to a new study.
The aggregate value of homes should edge past the July 1990 peak of $1.6 trillion sometime before the end of October, according to La Jolla-based Axciom/DataQuick.
In Los Angeles County, housing values totaled $412 billion, about two-thirds of the value from the peak of $454 billion in 1990. But Orange County is expected to eclipse its all-time value of $168 billion also set in 1990 by early November, John Karevoll, an Axciom/DataQuick analyst, said Friday.
Low interest rates are enabling new buyers to get into the housing market and current owners to upgrade, said Karevoll, who conducted the study.
“The interest rate is probably the main reason the wave of value washing over the state is going to continue certainly well into next year,” he said.
The monthly increase in home value could easily reach $20 billion by the end of the year and is beginning to be felt across the board, Karevoll said.
“The rise in home values, which started at the high end, have now moved into the mid-sized and entry-level markets. That’s the big factor, because there are so many of those homes,” he said.
Axciom/DataQuick conducted a computer appraisal of 7 million houses and condominiums, virtually all of them residential housing except farmhouses, which are classified differently in public records. The study was adjusted to account for houses that have been built since 1990.
So far, the new housing market has grown without the frenzy of the late 1980s, Karevoll said. Even though prices are rising, buyers have been able to enter the market without stretching their finances too much. Interest rates are running below 7% on 30-year fixed-rate loans. A decade ago, buyers paid 10% or more.
Also, lenders have done a better job of making loans available to those with lower incomes, Karevoll said.
