Southland Home Sale Prices Post Double-Digit Increases
Defying any notion of the economic slowdown elsewhere, the housing market in Los Angeles and Orange counties showed unusual strength last month, with robust sales and double-digit percentage gains in prices.
The median price of a home sold last month in Los Angeles County was up 10% from a year ago to an all-time high of $209,000. The median climbed nearly 14% to $281,000 in Orange County, the priciest market in the Southland, according to a report released Wednesday by DataQuick Information Systems, a La Jolla research firm.
In a period of usually slower activity, the report found that more homes were sold last month in both counties than in any previous November since 1989, just before the last recession. Despite shrinking inventory and higher prices, sales were up 6% in Los Angeles County and nearly 14% in Orange County.
“The slowdown that everybody anticipated hasn’t kicked into gear, and frankly, I don’t think it’s going to slow down,” said John Karevoll, the DataQuick analyst who compiled the report. “There’s nothing to indicate that people are getting skittish.”
Recent forecasts from UCLA, Chapman University, Cal State Fullerton and other groups suggest the Southland economy will remain fairly strong, with home values showing good gains next year. Karevoll is among the most bullish; he predicts sales will remain brisk and prices for Los Angeles and Orange counties will climb 10% to 12%, on an annual basis, through at least the middle of next year.
Other analysts, however, are more pessimistic.
As the U.S. economy loses steam, the housing market is slipping nationwide, and soon consumers will tighten their belts, unemployment will rise a bit and gains from the stock market will decline, said Mark Zandi, chief economist at Economy.com, a West Chester, Pa., consulting firm. That national slowdown will affect Southern California, he said.
“I’d be shocked if the area continued to record double-digit home [price] gains and was able to avoid a decline in home sales,” Zandi said.
For now, home buyer demand remains high, brokers say. And despite the decline in the stock market, many buyers appear to be tapping into rising home equity and taking advantage of lower mortgage rates to get into a new house.
Karevoll points out that Southland buyers are putting more money down on their home purchases and going with fixed-rate loans instead of adjustable-rate mortgages, which allow buyers to get into higher-priced housing they couldn’t afford with fixed rates.
In November, DataQuick said, 18% of buyers in Los Angeles County and 22.5% in Orange County financed their homes with adjustable-rate mortgages, compared with year-earlier figures of 32% and 40%, respectively. Meanwhile, the average down payment rose slightly last month to 15% of the purchase price in Los Angeles and to 18% in Orange County.
“These are numbers that just aren’t indicating that anybody’s skating on thin ice,” Karevoll said.
Mortgage rates, which peaked in May at 8.5%, have fallen steadily to 7.75% in November, according to Freddie Mac, a mortgage finance concern. That’s kept more entry-level and move-up buyers in the market by making mortgage payments more affordable.
But homes are in short supply.
Dave Macleod, an agent at Century 21 Beachside in Huntington Beach, estimated that listings in his area have declined by 20% from only two months ago.
“We have buyers waiting . . . that we don’t have houses for,” said Marty Rodriguez, who owns a Century 21 franchise in Glendora.
Statewide, the median number of days to sell a home was 30 compared with 35 a year ago, according to the California Assn. of Realtors.
The seller’s market in many parts of the Southland allows people such as John Black to become pickier with offers. Since September, he has fielded four offers for a three-bedroom, two-bath Glendora home listed for $329,000. He believes the home will attract a higher bid and has not yet followed his broker’s advice to cut the price to $325,000. He has rejected bids of $310,000 and $305,000.
“There’s nothing forcing us to accept anything than what we’re comfortable with,” Black said. “We’re content to leave it as is.”
In Los Angeles County, the home- price gains last month were led by new houses, with the median shooting up 14% from a year earlier to $310,000. Existing houses gained 10% to $215,000, and the median price of resale condominiums increased 9% to $160,000. The median price is the point at which half sell for more and half for less.
In Orange County, new-home prices jumped 20% to $408,000 last month, the median price of existing houses rose more than 11% to $292,500 and condos advanced by 12% to $180,000.
The number of homes sold rose nearly 6% in Los Angeles County to 8,695 units and 13.5% in Orange County to 4,250.
Typical monthly payments also rose, DataQuick said, assuming a 30-year fixed mortgage and a 10% down payment. The payment on a typical Los Angeles County home rose $113 a month over the previous November to $1,288 and the typical Orange County home mortgage ran $204 a month higher at $1,732.
The monthly DataQuick study reports on home sales that closed in November, reflecting agreements between sellers and home buyers over the previous 30 to 60 days.
A similar report is expected to be released later this week for Ventura, Riverside and San Bernardino counties.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Robust Housing Market
Defying any notion of the economic slowdown elsewhere, November home prices surged 10% in Los Angeles County over the same period a year ago.
Prices are up ...
Median price for all residential properties sold in Los Angeles County.
November 1999: $190,000
November 2000: $209,000
... and so are sales.
Sales of all residential properties sold in Los Angeles County.
November 1999: 8,218
November 2000: 8,695
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Source: DataQuick
