Home Prices Set Records in L.A., Orange Counties
Housing prices in Los Angeles and Orange counties climbed to record highs in August, capping a strong summer that analysts said bodes well for the coming months.
Boosted by robust sales of new homes, the median price of homes sold in Los Angeles County rose by more than 7% last month to $205,000. That surpassed the previous high of $203,000 in May 1989 and matched this past June.
In Orange County, the median price surged by almost 14% from a year earlier to $274,000, meaning that half of the houses sold for more than that and half for less. That was the highest in Southern California, according to a report released Wednesday by DataQuick Information Systems, a La Jolla research firm.
The number of houses sold in both counties also picked up in August after double-digit percentage drops in July.
In Los Angeles County, 10,443 new and existing houses and condos were sold during the month, up 2% from a year earlier. Total home sales in Orange County in August rose by 3% to 4,729.
Analysts said the supply of homes, especially affordable ones, remains very low. But some buyers have jumped back into the market lately because 30-year mortgage rates have been declining in recent weeks, falling back down under 8% after rising through the spring to a peak of 8.6% in late May.
“Consumer confidence has risen to near-record levels again, and buyers see this as a good time to get a home before prices go even higher,” said David Chapman, an analyst at Haskell & White, an Irvine accounting firm that specializes in the real estate industry.
In recent months, home prices in Orange and Los Angeles counties have increased at a quicker pace than the nation as a whole. And as the region heads into the slower-selling fall season, analysts said, there appears to be a clear path to more record-setting prices through December and probably even longer.
“I think this is the way the rest of the year is going to look,” said John Karevoll, the DataQuick analyst who compiled the report. “The numbers are sustainable and we will have a couple of more record highs in prices before the end of the year.”
David Lereah, chief economist at the National Assn. of Realtors, a Washington-based trade group, said he expects mortgage rates to remain stable or decline in the coming months. That should help lift new and existing home sales as more first-time buyers are drawn into the market.
“The market is doing very well and, as long as a home is marketed aggressively, priced realistically and shows halfway decently, then it’s salable,” said Stephanie Vitacco, an agent at Fred Sands Realtors in Northridge.
She said demand remains strong, with homes priced at $250,000 or less still often drawing multiple offers.
But right now, based on current incomes and mortgage rates, less than 40% of Los Angeles consumers can purchase an existing home. In Orange County, only 25% of consumers can afford an existing home, according to the California Assn. of Realtors.
Last month, stronger sales of new homes, which are generally more expensive than existing ones, helped push up the overall median home price.
In Los Angeles County, sales of new homes jumped 6% in August from a year earlier, and they were up a whopping 17% in Orange County.
Analysts said more buyers are choosing new homes because the number of existing homes for sale is near an all-time low. And builders have increased their output this year, although new home construction continues to badly lag demand.
Builders, however, are putting up ever-more-expensive homes, out of reach of most buyers. Indeed, the median price of a newly built Orange County home sold in August was $400,250--up 22% from a year earlier.
Propelled by such higher-priced homes, typical home buyers in Los Angeles County last month were looking at a monthly mortgage payment of $1,296, compared with $1,205 in August 1999, according to DataQuick, basing its calculation on a 30-year, fixed-rate loan with a 10% down payment.
Even so, with the economy humming along, homeowners generally appear to be managing their payments. In Los Angeles County, first-stage foreclosures declined to 2,136 in August from 2,308 a year earlier.
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Moving Back Up
Housing prices rose in August in Los Angeles and Orange counties, setting new peaks after a slight decline in July.
Source: DataQuick Information Systems
