L.A. County’s Home Prices Hit a Record

Surging Southern California home prices last month set a new high in Los Angeles County and matched a record in Orange County, surprising analysts who expected the softening economy to slow the rising cost of housing.

The median price for a Los Angeles County home shot up 13.5% to $218,000 in March over the same month last year, according to a report released Tuesday by DataQuick Information Systems Inc., a La Jolla research firm. It was the largest year-to-year monthly increase since 1989.

The spike in the median price--the point at which half the homes sold for more, half for less--also marked only the second time in nearly four years that Los Angeles prices rose faster than Orange County prices, which grew 12.3% to $292,000 last month.

“We don’t see much of a downturn, which is what people are looking for, and I don’t see a price decrease in the cards,” said John Karevoll, the DataQuick analyst who compiled the report. “What we see is a continuation of the trends that were in place three and six months ago.”

But even as the market heads solidly into the prime selling season, real estate agents see a few signs of consumer wariness. Buyers are questioning whether the time is right, for instance, and more deals are being canceled, they said.

DataQuick reported that the number of homes sold this March dropped from a particularly strong March 2000, partly because of fewer homes on the market. Sales fell 10% in Los Angeles County and 9% in Orange County over March last year. But Karevoll attributed a third of the decline to the fact that there was one less weekday last month in which to record closings.

“What I’m seeing right now in Southern California is a bit of a plateau. It’s a time of uncertainty, but it’s still a relatively healthy market,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.

While the market is less frenzied than a year ago, the trend over the first three months shows strong price gains--10% in Los Angeles, 12% in Orange County--over last year’s first quarter. Sales, though, tailed off 4.4% in Los Angeles and 9.2% in Orange County.

The National Assn. of Realtors predicted earlier this month that all major U.S. housing indicators would rise, leading to a 4% gain in prices and the second best year on record for home sales. The real estate market would be boosted by low unemployment and low mortgage rates, said David Lereah, chief economist for the Washington trade group.

But buyers have grown more cautious as they see the stock market struggling and the number of layoffs increasing. And a slower sales pace makes it harder for buyers to sell their homes and move up to bigger ones.

“A number of sales agents are getting more . . . buyers asking, ‘Is it a good time to buy?’ ” said John Burns, an analyst at the Meyers Group, an Irvine consulting firm. “A year ago, they were asking, ‘What time do I have to be here to get the lot I want?’ ”

In Orange County, for instance, the number of buyers placing deposits on new homes during the first three months of this year rose 10% over last year’s first quarter, but those who canceled their orders jumped 70%, according to the Meyers Group.

In one project, a group of consumers remained on a waiting list for more than five months to purchase $400,000 houses in south Orange County, Burns said. When their turn finally came last month to make a down payment, none stepped forward to buy. Still, with scant housing construction in the county, other customers snapped up the homes within days.

Homes in Orange County also are staying on the market a little longer. At the March sales pace, it took 2.8 months to sell a home, up from 2.2 months a year earlier. The time, though, is far below the industry standard of nine months, according to the state Realtors group. A similar figure for Los Angeles was unavailable.

Once the homes are sold, though, sellers typically are getting large returns. A quarterly survey of Realtors shows the median amount for seller’s equity rose to a record $100,000.

High-end buyers, a bellwether for the overall real estate market, are showing less enthusiasm for million-dollar homes as they make offers below full price and take longer to make up their minds about buying, Appleton-Young said.

In Huntington Beach, three homes priced at more than $3 million each are in escrow, said Chuck Grant, who manages a First Team Real Estate brokerage in Huntington Beach. Clients think about holding back from making a purchase until they see the thin inventory of luxury homes, he said, and then buy before prices go higher.

Some lenders also have reported brisk business.

At Washington Mutual Bank, the state’s largest home lender, the dollar volume of mortgages has risen 10% during the first three months of this year over the 2000 first quarter, said Greg Sayegh, a senior vice president. In the spring and summer, “we think the volume will continue to grow,” he said.

Lower mortgage rates helped reduce monthly payments in March.

With a 10% down payment and a 30-year fixed mortgage at 6.58%, a consumer’s monthly payment for a median-priced home in Los Angeles would be $1,250, or $2 lower than a year ago. In Orange County, the typical monthly payment would be $1,675, or $21 less than a year ago.

The DataQuick report covers home sales that closed in March, reflecting agreements between home sellers and 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.

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Higher Prices, Lesser Sales

Record home prices in March helped boost median prices of homes for the first three months this year over the first quarter last year. But higher prices and fewer homes on the market helped to reduce the number of sales. A look at trends so far:

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Source: DataQuick Information Systems, La Jolla