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Median Home Sales Price Cracks 1989 Record

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TIMES STAFF WRITER

San Fernando Valley home prices hit a record median of $255,000 last month, beating for the first time the mark set in 1989 before the recession devastated home values.

The August median price for existing homes--the point at which half the homes sold for more and half for less--was 4.1% more than the $245,000 median record set in June 1989, according to a report released Monday. It also marks a whopping 20.3% leap over the median price in August one year ago.

“This record median price drives a stake through the statistical heart of the last recession,” said Mitch Davis, president of the Southland Regional Assn. of Realtors, which issued the report. “This is an indication that that’s over with, more so than it’s been for the past year and half.”

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The median single-family resale home price in the Santa Clarita Valley also hit a record in August, rising to $215,900, up 3.8% from the year-ago figure.

“From the homeowners’ point of view, it’s a very encouraging sign,” said Mel Wilson, vice president of operations for Coldwell Banker. “Now they can see that their equity is built back up.”

On paper, perhaps, but over the past 11 years inflation has gone up 33% in Los Angeles County. And home buyers who expected to see their property values increase instead saw their equity ravaged by inflation and the impact of the 1994 Northridge earthquake, which weakened the local market with foreclosures.

Prices sank to a modern-day low of $155,000 in November 1995. They began edging up steadily by 1997, but reaching the high-water mark eluded the local market until last month.

Many real estate experts, though, saw the August record-breaker as a mixed message: good news for existing homeowners, but not so great for those trying to find a home, or businesses trying to lure new recruits into the area.

Wilson noted that the huge price hike over the past year makes it more difficult for local employers. “For them it means, ‘I’ve got to pay people more so they can afford to buy these houses.’ ”

Still, home values have been escalating even more quickly in areas like the Westside and south Orange County.

In Los Angeles County as a whole, the median price hit $203,000 in June--matching the record median set in 1991, according to a report released in July by DataQuick Information Systems Inc. But the California Assn. of Realtors, using a different database, put the county median for July at $211,150, still shy of the pre-recession high reported by that group of $229,260, set in May 1991.

While acknowledging the psychological significance of meeting, and beating, the pre-recession high, real estate experts and economists fretted about the effect any sustained price jumps would have on the ability of the average family to buy a home.

“We do have serious affordability issues,” said Jack Kyser, chief economist for the Los Angeles County Economic Development Corp. “In Los Angeles County, the June 2000 average price of a new home, a newly built home, was $311,000. That’s a 5.9% increase over June of ’99 and that’s getting to be a pretty stout price.”

The year-to-year price jump in the San Fernando Valley far outstripped the 6.5% increase in sales during the same period. The report showed that 1,204 single-family homes changed hands in August, compared with 1,131 in the same month last year. Sales were up 14.6% from July.

In the Santa Clarita Valley, 242 single-family homes were sold--about the same as a year ago, but up 8.5% from July.

Real estate experts and economists said August’s eye-popping price gains were the result of both slim supply and fat paychecks.

With the economy booming, consumers are in the mood to buy and in many cases have the wherewithal to do it.

“It’s supply and demand,” said Jim Link, executive vice president of the association. “The supply is very short and the demand is still very strong. And that’s pushing the prices up.”

There were 5,023 active residential listings at the end of August--4,039 single-family homes and 984 condos, according to the report. Both categories were 16% below figures from last August.

“What we’re running into is that we haven’t built enough housing to keep up with the demand in Los Angeles County,” Kyser said.

“So, I think you’ll see unit sales drop but the price keeps going up. It reflects a shortage of overall product and [of] quality properties.”

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Figures from the Burbank-based Construction Industry Research Board show that even though permits to build single-family and multifamily units in the county are up 23.2% for the first seven months of this year compared with the like period last year, the numbers are still just a fraction of the housing growth seen in the late ‘80s and early ‘90s.

In the first seven months of this year, permits were taken out to build nearly 10,000 new housing units in the county, including 3,853 in the city of Los Angeles.

But Ben Bartolotto, CIRB research director, noted that in 1989, permits were taken out for 23,794 single-family homes and 24,500 multifamily units (mostly apartments).

“So this is better than it going down or staying flat,” said Bartolotto of the current growth spurt. “It helps. But historically, we’re still at low levels. Even though we’ve seen growth, [permit levels] have never rebounded to the levels they were at in the beginning of the recession.”

The lack of available single-family homes has not only helped fuel the current price hikes, but also pushed more buyers into the condominium market.

Condo sales in the San Fernando Valley were up 12.1% from August 1999, with 399 units changing hands last month, compared with 356. Sales were essentially unchanged, compared with July.

The median price of a condo rose by 14.3%, to $140,000. The condo median also hit $140,000 in June, and that’s the highest median since May 1993.

Rising condo prices in the San Fernando Valley were enough to lure sellers like Carey Campbell back into the market.

For years, Campbell had hoped to sell his two-bedroom North Hollywood condo, aiming to move closer to his Century City job with Northrop Grumman Corp.

“I was going to do it earlier. I hadn’t planned on staying here 9 1/2 years,” said Campbell, corporate travel manager for the defense contractor. “But the prices dropped drastically in ’92, ’93, ’94, ’95. Prices went into the toilet, actually.”

With housing values on the rebound, particularly in the East Valley, Campbell decided to give it a shot, listing his condo for $172,500. The unit had its first showing Saturday, and by noon Monday, Campbell received his first offer.

“I think now is a good time to sell, when I can get close to what I paid for my unit,” he added.

Price hikes in some of the hotter sections of the Valley are also pushing more would-be buyers into some less-pricey areas.

Francisca “Lee” Hull has worked the real estate market in the northeast San Fernando Valley for 11 years. She estimates that last month, single-family home prices in her area rose by 2% or 3%, not the 8% listed for the Valley overall.

“That’s a scary jump,” she said. “If it’s 8% on this side of the Valley, we’re all in trouble.

“Any time you have a market jump too quickly, you have a problem.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

After 11 Years, Home Prices Set New Record

The median home price for single-family homes in the San Fernando Valley hit $255,000 last month--passing the previous mark of $245,000 set in June 1989. Prices declined sharply during the recession of the early 1990s.

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MEDIAN HOME PRICES (Existing homes, June 1989 to Aug. 2000)

June 1989: $245,000

Aug. 2000: $255,000

Source: Southland Regional Assn. of Realtors


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