Home Prices Continue to Rise in Region

Los Angeles and Orange County home prices grew at a torrid pace in October over the same month last year, suggesting that the tumult in the stock market and emerging signs of a national economic slowdown have yet to faze the region’s housing market.

Last month’s surging prices--marked by double-digit percentage gains in nearly every housing category--also set the stage for robust home sales in the last two months of the year, a time when the market typically tapers off.

The median price for homes in Orange County soared 16% from October 1999 to a record $284,000. The median in Los Angeles County grew 10% to $203,000, according to a report released Monday by DataQuick Information Systems, a La Jolla research firm.

While the Orange County price also was up over September, the October figure for Los Angeles actually edged down $3,000 from the previous month, a typical cool-weather pattern.

Despite signs of a weaker housing market nationwide, California is benefiting from stronger economic activity. The state’s unemployment rate hit an eight-month low in October, according to figures released Monday. A record number of people statewide, more than 16 million, were employed last month.

“I think we’re due for continued price increases and high sales levels,” said John Karevoll, the DataQuick analyst who prepared the report. “I don’t see anything changing.”

By the end of this year, he expects the median price, the point at which half the homes sell for more and half for less, to hit $211,000 in Los Angeles County and $293,000 in Orange County.

One reason home prices have climbed, even though fewer people can afford them, is that more people have generated wealth from rising home equity and from the stock market, said G.U. Krueger, an analyst at Institutional Housing Partners, an Irvine real estate venture capital firm.

Many are cashing in stock and options to use as down payments, he said. The so-called wealth effect encourages consumers to spend on houses and other luxury goods, propping up sales.

There also are more conventional reasons for the higher prices.

Builders, for instance, are still struggling to keep up with demand, especially for affordable housing. At the current selling pace, there are enough homes to last just 3.3 months, down from 3.6 months a year ago, according to the California Assn. of Realtors. A nine- to 12-month supply usually keeps prices in check, preventing growth beyond a moderate pace.

But the higher prices may not slow the market as much as might be expected, said Greg Gotthardt, a partner at Ernst & Young Real Estate Advisory Services in Century City.

“Even though affordability is declining,” he said, “we still are generating enough job growth that’s bringing people to Orange and Los Angeles counties.”

Indeed, the only roadblock appears to be a dearth of listings as sellers start to put their plans on hold until after the holidays, said Patrick Knapp, an agent at Remax Real Estate in Newport Beach.

Increasingly, he said, attractive properties are drawing multiple offers. But with so little to choose from in Orange County, some are paying top dollar even for homes in need of repair, he said.

The two counties recorded higher prices even though the number of homes sold in Orange County grew by only 5% to 4,139 units and the number in Los Angeles County dropped nearly 2% to 8,940 dwellings from October 1999, according to DataQuick.

In Orange County, the median price for new homes grew 29% to $444,000, while prices for existing houses and condominiums each rose nearly 14%, to $295,750 and $182,000, respectively.

In L.A. County, new home prices rose to $291,000, up nearly 13%, while condos jumped 12% to $157,000 and existing homes increased more than 9% to $210,000.

The monthly mortgage payment in October for a typical Orange County home rose $230 from a year ago to $1,771, assuming a 30-year fixed mortgage at a 7.41% interest rate with a 10% down payment. In Los Angeles, the mortgage outlay under that same scenario rose $98 from a year ago to $1,266, according to DataQuick.

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Mixed Month

Total sales, including new homes, resale homes and condominiums, in October this year and last:

Los Angeles home sales

Oct. 1999: 9,111

Oct. 2000: 8,940

*

Orange County home sales

Oct. 1999: 3,933

Oct. 2000: 4,139

Source: DataQuick