L.A. Home Values Play Catch-Up
Is the glass half empty or half full?
On the one hand, Los Angeles County led the nation in rising home values with a 14.6% year-over-year gain during the second quarter.
On the other hand, the average home in Los Angeles County is still worth about 10% less today than in 1990.
If you live in Los Angeles County you’re probably asking yourself, “Is my home worth more or less?”
The answer: It depends on where you live.
As Southern California enters its fourth year of recovery, certain communities, while continuing to make gains, have yet to realize home values reached during a market peak in 1990.
Homes located in Los Angeles’ affluent Westside, for example, have largely regained their 1990 values. But the high desert communities of Palmdale and Lancaster continue to lag.
“It will require at least a year before home values for Los Angeles County as a whole get back to where they were in 1990,” according to Nima Nattagh, director of research for First American Real Estate Solutions, which tracks U.S. home values on a quarterly basis.
Nattagh’s report measures appreciation of homes that sold at least twice since the second quarter of 1990 and tracks the rate of gain or decline rather than report the median price for each market.
Riverside and San Bernardino counties are two other Southern California communities suffering from the negative equity phenomenon. Homes in those counties are worth 15.5% less then they were in 1990, but they posted year-over-year gains during the second quarter of 10.8%.
On the other end of the spectrum, meanwhile, leading the nation’s winners list during the second quarter were Denver, which experienced a 118.6% boost, and Portland, which posted a 130.7% surge, compared to the same period in 1990.
Why do home values rise so dramatically in some communities compared to others?
The housing market, Nattagh said, is driven by a list of fundamental factors ranging from the local economy to a particular community’s specific supply and demand for housing. Not only have Denver and Portland been hot housing markets throughout the 1990s, but unlike Southern California they did not experience the dramatic downturn that communities here did during the early 1990s.
So where do we go from here?
Nationwide home values grew by 5.3% during the second quarter of this year, compared to the same period in 1998. By comparison, during the first quarter U.S. home values grew by a year-over-year rate of 7.2%.
“In certain previous hot markets--such as Orange County, San Diego and Las Vegas, to name a few--the rate of growth seems to have moderated,” Nattagh said. “As a result, we’re expecting home value increases to moderate in the second half of this year.”
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Home Value Changes
Based on Repeat Sales
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Metro Area Change from 2nd Quarter, 1990 to ’99 Hartford -22.0% Riverside-San Bernardino -15.5% Los Angeles-Long Beach -10.0% Sacramento -5.3% Philadelphia -0.4% Atlantic-Cape May 1.6% Washington 4.2% Orange County 6.0% New York 6.7% Bergen-Passaic 8.5% San Diego 11.1% Baltimore 11.7% Newark 13.3% West Palm Beach 16.2% Oakland 17.6% Orlando 19.7% Stamford 21.8% Fort Lauderdale 24.9% Boston 26.8% Jacksonville 28.3% Atlanta 32.3% Miami 35.7% San Jose 38.1% Raleigh-Durham 44.0% Chicago 46.0% Nashville 47.5% Minneapolis-St. Paul 49.0% Seattle-Bellevue 49.2% Cleveland 51.4% Phoenix-Mesa 52.4% Detroit 71.0% Denver 118.6% Portland 130.7% United States 22.6%
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Source: First American RES
