For Antelope Valley, It’s Hammer Time Again
Median prices for new homes in the Antelope Valley have for the first time exceeded the region’s 1989 peak--a hopeful sign for an economy still struggling to put the recession behind it.
The median price for the second quarter ended June 30 was $165,990, beating the 1989 mark of $152,963, according to the Meyers Group, an Irvine-based research company that tracks new home sales.
“The market has stepped up,” said Tom DiPrima, a Western region executive vice president for Kaufman & Broad, the nation’s largest home builder, which has five active developments in the Antelope Valley.
Even so, the recovery is not complete. The new home values are not adjusted for inflation, and sales counts are nowhere near levels of the previous era.
In 1989, for example, 4,210 new homes were sold, compared with 699 in 1999. During the first half of 2000, 399 new homes were sold, according to the Meyers Group.
The market for resale homes also has yet to fully rebound. The median price for a single-family home in June was $100,000--still 27% below the 1989 high of $137,000, according to DataQuick Information Systems of La Jolla.
The median is the point at which half the homes sold for more and half sold for less.
By comparison, the median home price in Los Angeles County rose to $203,000 in June, matching the all-time high set in May 1991, according to DataQuick.
Still, analysts said the trends suggest a budding recovery for the Antelope Valley.
Property values there have been rising since the start of the year. DataQuick reports that in January the median price for resale homes there was $85,000. By February, it was up to $90,000, and has steadily increased several thousand dollars each month. In May and June, it was $100,000.
DataQuick analyst John Karevoll doesn’t foresee the Antelope Valley residential real estate market reattaining its former heights this year, but he said it could happen in one to two years.
“It’s only a question of time,” Karevoll said.
At present, Los Angeles-area home buyers can still find entry-level housing without driving out to the desert. But as prices and interest rates rise, the inevitable will occur, Karevoll said.
“A point will come--a year, or a year and a half, or two from now--when mortgage rates may be up a point and home values may have continued to go up 10% a year,” he said. “Then, a significant number of potential home buyers will get bumped out of the [L.A.] market.”
Many Antelope Valley home shoppers are locals seeking to move up now that they can unload existing properties at a profit, but there’s also a trickle of potential buyers from “down below,” as locals refer to residents of Los Angeles and the San Fernando Valley.
Lancaster real estate broker Danielle Marvin Lewis had a recent transaction in which a young family employed in Burbank sold their small, two-bedroom Los Angeles home to buy a 2,200-square-foot, four-bedroom home in west Palmdale for $155,000. “People want to be close to the amenities the city offers, but they don’t want to be in that price range,” Lewis said.
During the 1980s, Southern California’s wildly escalating home values priced many people out of the market in areas such as the San Fernando and Santa Clarita valleys. Anxious for the security of homeownership--and hoping to buy property before prices spiraled even higher--thousands flocked to the Antelope Valley.
Builders, eager to exploit the opportunity, began an unprecedented building boom. Social scientists wrote of the emergence of fast-growing edge cities, like Palmdale and Lancaster, which seemed destined for big growth.
But when Southern California sank into recession in 1990, home values tanked. Home buyers could now afford homes in traditional Los Angeles neighborhoods, and hot, windy and way-out-there Palmdale-Lancaster no longer seemed as attractive. The Antelope Valley, struggling with the aerospace industry cutbacks, had an oversupply of homes.
The result: The Antelope Valley became a foreclosure hotbed. As values plummeted, some homeowners owed more on their property than it was worth--and simply walked away, putting the house into foreclosure. So even as the Southern California economy recovered, Antelope Valley property values remained depressed.
“Nothing is as nasty for a market than a huge number of foreclosure properties,” DataQuick’s Karevoll said. He estimates that home prices in the Palmdale-Lancaster region fell an additional 7% to 10% in the mid-1990s, on top of the overall decline in real estate values, because of excess inventory. New housing developments virtually came to a standstill in 1992.
Today, with home sales on the rise and prospects of an expanding employment base, the sounds of bulldozers and pounding hammers can again be heard in the Antelope Valley.
Kaufman & Broad’s Delta Ridge tract in west Palmdale has sold about 40 units in recent months, and expects to sell out all 209 homes; Starlight, also in west Palmdale, will have 128 homes when it’s built out. Three other developments--one in Rosamond and two in Lancaster--with more than 600 homes among them, are nearly sold out after several years, said DiPrima of Kaufman & Broad.
Rancho Vista, a 1,307-acre master-planned development in west Palmdale begun in the 1980s, started expanding anew in 1998 with new housing tracts from builders, such as Beazer Homes and Forecast Homes.
In a month, an 18-hole public golf course will open, one of a number of amenities in a community trying to change a perception that it is Southern California’s version of Dry Gulch.
R. Gregg Anderson said his Rancho Vista Development Co. has sold out a 100-home project in Palmdale--with properties in the $190,000 to $270,000 range--without advertising.
Anderson said most new-home buyers today are Antelope Valley residents seeking to move up.
“We’re not really feeling the L.A. market yet,” Anderson said. “But we will.”
When? In six months, he bets. “Once we start advertising and they see what’s available, there’s going to be great interest here,” he said.
Home buyers clearly get more for their money in the Antelope Valley. One Palmdale builder is offering 2,400-square-foot homes with four bedrooms and three-car garages for $213,000.
Anticipating the market rebound, Valencia-based Newhall Land & Farming Co. recently acquired majority ownership of City Ranch in Palmdale, a 1,900-acre master-planned development that will contain 4,200 single-family homes, 300 apartments and 260,000 square feet of commercial development--if all goes according to plan.
At present, there is no timetable for building. Original owner Kaufman & Broad maintains a financial stake and may build some tracts.
Other developers are also on the move. Orange County-based Sage Community Group is buying Ritter Ranch, the 7,000-acre master-planned west Palmdale community that’s changed hands several times in recent years and whose current owner declared bankruptcy in October 1998.
Sage attorney Mike Andrew said he expects the deal to close in 60 to 90 days. After that, grading will commence. Sage hasn’t yet sold off parcels to builders, but plans call for as many as 7,000 homes to be constructed over a period of years.
Could these renewed commitments signal a return to the building frenzy of the late 1980s? Builders, having taken their lumps during the recession, say that’s unlikely. “I think that would only happen now if we had a major corporate relocation,” Rancho Vista’s Anderson said.
Dean Wehrli, managing director of the Meyers Group, doesn’t believe the Antelope Valley will ever return to the 1988-style land rush era, when 5,457 new homes sold in a year. Wehrli pointed out that many of those sales were financed with sub-prime interest rate programs that no longer exist. Furthermore, he believes those deals set the scene for the horrendous downturn that followed.
“It [the Antelope Valley] can be a vibrant, healthy appreciating market at less than half of those peak sales and prosper on a more realistic and sound footing,” he said. “You don’t want to go back to a boom and bust cycle.”
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* HIGH ON DESERT
Lancaster and Palmdale are working to attract new businesses to the Antelope Valley. B4
* PRICE DIP
The San Fernando Valley’s housing comeback suffers minor setback. B8
