Growth Spurs Price Surge in Suburbs
Explosive growth in popular Southern California suburbs is driving home prices there to levels on par with many of the region’s metro areas, further segregating residents by race and income and promising even longer commutes for first-time home buyers.
Consumers continued with an exodus from urban centers in the ‘90s, according to U.S. Census Brueau data released last month. But this time many were searching for bigger homes with special amenities at prices they could afford.
When the region emerged from the recession in the mid-’90s, larger homes quickly replaced smaller, entry-level fare in fast-growing communities like Santa Clarita, Simi Valley, Mission Viejo, San Clemente and Irvine.
These areas all experienced major population increases in the ‘90s, according to census figures, with Santa Clarita seeing a 36.6% gain, Irvine growing by 29.7%, San Juan Capistrano by 29.2%, Mission Viejo by 27.9%, San Clemente by 21.5% and Simi Valley by 11.1%.
Southern Californians in search of affordable homes in neighborhoods with low crime rates and good schools started migrating to suburbs like these in the 1970s. Quality-of-life issues continue to fuel this trend, although now instead of searching for an entry-level home, many are looking for a bigger move-up home. This change is often forcing first-time home buyers to move even further away from urban centers.
Booming job growth in areas like the Ventura Freeway corridor between Chatsworth and Camarillo, home to many tech companies; Santa Clarita, where several major companies moved their headquarters; and the region between Irvine and San Juan Capistrano, which saw a number of major leases signed last year, helped feed an increasing appetite for bigger, fancier homes in the ‘90s.
Consumers searching for these homes often included baby boomers in their peak home-buying years and employees flush with stock options, who helped boost median home size in Southern California by about 24% in the ‘90s, from 1,864 square feet in 1989 to 2,311 square feet last year, said John Burns, an analyst at the Meyers Group in Irvine.
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The jump in home size in Southern California was about six times greater than a national increase in the square footage of new homes during the last decade. The median-sized home nationally gained about 4% more space, moving from 1,688 square feet in 1989 to 1,750 square feet in 1999, according to the American Housing Survey, which is conducted every other year.
A trend toward bigger homes in Southern California, prompted in part by builders looking to recoup spiraling land costs, worked in tandem with shrinking inventories to double and even triple median new home prices in some Southland areas between 1990 and 2000.
Skyrocketing new home prices provide a snapshot of how population shifts affected the region’s housing stock in the ‘90s.
For example, a median-priced new home in Irvine went for $349,000 in 2000, up 56% from $224,000 in 1990, according to DataQuick Information Systems, a La Jolla-based real estate research firm.
In Simi Valley, median new home prices jumped 42% from $258,500 in 1990, to $393,500 in 2000, DataQquick said. Mission Viejo saw a 48% gain from $264,000 in 1990 to $390,250 in 2000, and San Clemente posted increases of 35% from $315,000 in 1990 to $426,500 in 2000, according to DataQuick.
It’s important to note that these figures are widely influenced by the size and cost of new homes that were sold that particular year. For example, a cluster of million-dollar homes in the hills east of Interstate 5 in San Juan Capistrano vaulted the city’s median new-home price to $995,000 in 2000, a whopping 287% increase from $257,250 in 1990, DataQuick’s numbers show.
In addition, home size and median home prices are cyclical and typically ebb and flow with the economy.
The jump in new-home prices was also affected by the fact that builders constructed half as many new homes in the latter part of the decade as they did in the late ‘80s, making new homes many times more expensive than existing homes, said Al Gobar, a Placentia-based housing consultant.
And housing experts say bigger price tags for bigger homes also show that consumers are increasingly shouldering the growing costs of suburban development.
“The true cost of sprawl is starting to be shouldered by the home buyer and leads to heightened economic segregation,” said Peter Calthorpe, an urban designer and co-author, with William Fulton, of, “The Regional City: Planning for the End of Sprawl.” ’Across the nation houses cost more because land costs more, and it costs more to meet governmental and environmental restrictions.”
Heightened economic and ethnic segregation in popular Southern California suburbs was also evident in census figures released in March, which showed that most of the consumers exiting urban areas in the ‘90s were affluent whites and Latinos.
According to the census, Asian Americans also moved to more affluent areas in the last decade, especially in Orange County, while blacks moved in large numbers to Palmdale, Lancaster, the Moreno Valley and the Inland Empire.
Burgeoning new-home prices are another matter for first-time home buyers. The trend toward bigger, pricier new homes in the late ‘90s often forced families to buy a condominium or townhouse as their first home, so they could earn some equity to put down on a single-family residence, said Bruce Karatz, chief executive and chairman of KB Home.
“A third of our first-time buyers [in Orange County] are moving from some form of attached housing that they owned into their first single-family home,” Karatz said.
First-time home buyers in search of affordable single-family homes in the late ‘90s relocated to suburbs even further away from job centers-such as Hemet and Lake Elsinore in the Inland Empire, and Palmdale and Lancaster in the Antelope Valley.
“To have the home of their dreams they have to make the choice to have a longer commute,” said Joyce Mason, vice president of marketing at Pardee Homes.
Indeed, Palmdale and Lancaster were among the fastest-growing cities in Los Angeles County in the last decade, according to the 2000 census, gaining 69.5% and 22%, respectively.
How will the region’s housing stock change in the 21st century?
Builders and housing advocates agree there’s already a movement by consumers frustrated by long commutes and high suburban housing costs toward denser housing in metro areas.
“We’ll start to see more higher-density housing,” said Les Thomas, president of Shea Homes Southern California. “You won’t see people living in a two-story town home, but in a four-story or a 10-story building.”
