Strategize Affordability

The numbers bear out what most homeowners across the San Fernando Valley already know: 1998 was a very good real estate year. It was, in fact, the best year of the decade--not a difficult feat, considering how far recession and earthquake had knocked down property values since their peak in the late 1980s.

Roughly $4 billion worth of Valley residential real estate changed hands last year in 16,500 transactions--the most since 1989. Analysts suggest the Valley outpaced other parts of Southern California with strong sales and a solid rebound in prices. Overall, the median price of single-family homes in the Valley jumped nearly 15% from $165,833 in 1997 to $190,117 in 1998. Condominiums rose even faster--with median prices up more than 24%.

All of this is good news for homeowners. Recent buyers can celebrate their paper wealth as equity grows. Longtime owners can take some comfort in knowing that real estate values are climbing slowly back. Last year was the best year since 1993. For renters looking to buy a new home, though, rising prices can mean a few more months of saving--or lock them out of the market altogether. As demand picks up again and new construction starts to fill out the few vacant pieces of land left in the Valley, care must be taken to ensure that average residents can own their own homes.

Over the past eight years, few people have worried about affordable housing. The market took care of that. But as prices rise faster than wages, it’s time to focus on strategies that reward developers for building moderately priced homes in developed neighborhoods.