Housing Prices Soar at Low End
Rising home values, long taken for granted in affluent neighborhoods, finally have begun to improve fortunes in working-class cities across Southern California.
Modest homes in lower-priced neighborhoods in Los Angeles County drove the overall median price in July to a record high of $231,000 as home sales reached near-frenzied levels, according to figures released Monday by DataQuick Information Systems Inc.
In areas such as Bell, Paramount, Compton and Pomona, residential real estate values are shooting up 17% or more, while property values are diving in places such as Malibu and Bel-Air--a complete reversal of the trends over the last few years. Even poorer pockets of affluent Orange County helped to push up prices in July.
The extraordinary activity in July far exceeded expectations and underscored how powerful consumer spending is in keeping the economy on track, especially in Southern California.
“The low end is driving today’s market in Los Angeles County,” said John Karevoll, the analyst who prepared the report. “The main reason is that the low end has lagged and is now seeing increases that other homes saw last year.”
County home values, as measured by the median price, jumped 17% last month, according to DataQuick. That amounted to a gain of $33,000 from July of last year, the most since DataQuick began recording the changes in 1988.
Even more stunning was the number of sales of new and existing homes and condos, which totaled 10,825, or 20% more than a year ago.
“The economic downturn hasn’t really kicked in when it comes to home sales yet,” Karevoll said.
The market has grown so much that even areas once shunned, such as the neighborhoods near Florence and Normandie avenues that were torn by riots nearly a decade ago, are beginning to attract buyers. Agents said they can describe homes in those areas without fear that buyers may walk away.
“Three or four years ago, we wouldn’t have considered a property near Florence and Normandie,” said Torras Franklin, 37, who has a home in escrow about two miles away. “But things have seemed to settle down and we can consider nearby areas that in the past we wouldn’t have given a second thought.”
Although last month may have been a one-time blip--most of this year sales have been tracking near last year’s levels--the strong activity followed robust sales in June and showed how the home-buying action has shifted from Orange County to Los Angeles County, which has a much bigger supply of affordable homes.
In pricey Orange County, home sales last month surged 12% to 4,295 units, reversing a five-month decline in year-over-year sales.
The median price climbed 15% to a record $303,000 last month. It was the 50th month in a row that Orange County prices grew from the year-ago period, Karevoll said.
“We get calls saying, ‘If you find anything under $230,000, I don’t care where it is, I just want to see it.’ Even if the home needs some work, most will try to buy the property rather than commute from Riverside County,” said Pablo Velasquez, owner of Advance Realty in Santa Ana.
Double-digit price increases also hit areas such as Littlerock, south of Palmdale, where median prices jumped 40% to $117,500 over the last three months from the same period a year earlier. Some areas of nearby Lancaster saw prices jump 27% to $108,000. And in certain parts of Pomona, median prices have risen 16% to $151,000.
Closer to the urban core, some areas of Paramount have jumped 21% to $165,000. In the Bell and Compton area, some homes have climbed 19% to $176,000, while areas in Inglewood have increased 17% to $160,500. Parts of South-Central Los Angeles have seen prices rise as much as 18% to $192,000, DataQuick said.
Sales in many heavily Latino communities, such as Bell, Pico Rivera and La Puente, were boosted by pent-up demand, lower interest rates and relaxed immigration laws, according to Realtors and the DataQuick figures.
Even in communities where sales of modestly priced homes dropped, buyers still bid up the going rate for homes that did sell, turning in multiple offers on properties more than half of the time.
“People are fighting over the properties,” said Greg Jones of Ladera Estates Realtors, which serves South Los Angeles. “Homes are going for asking or above.”
Six months ago, Arlette Lyons, owner of Lyons & Associates Inc. in West Covina, sold the Covina home of a man who was moving to Texas. Eager to return to the Golden State, he called Lyons recently to see how much his old home might sell for now.
“He’d have to pay easily $15,000 more,” Lyons said. “He’d have to pay $230,000 for the same house.”
In Orange County, Jesse Zamarripa, 29, and his fiancee, Eva Estrada, bought their first home recently. It took months of searching, but the couple, who will marry this weekend, were able to find a Fullerton home in the $235,000 range.
“Having our own house was the most wonderful thing I’ve ever felt,” Zamarripa said. “We got the keys, came in the house and sat in each room for 30 to 45 minutes. We dreamed about what our future would be here with Christmas trees, barbecues and, one day, our kid’s room.”
The huge number of home sales throughout the region caught some agents off guard. They said they worked 12 hours a day seven days a week in July.
Given the tight market, many buyers have looked at two or three homes before making an offer, rather than shopping for weeks, even months as they did earlier this year, said Ted Brass, an agent at Century 21 the Service Co. in Inglewood. The result has been a larger turnover in sales.
“I’ve seen more offers written at full price, close to full price or over full price in the last two months than I’ve ever seen in my career,” said Brass, a 23-year veteran in the business.
Programs for qualified first-time home buyers helped boost the number of buyers in the market, he said. Los Angeles, for instance, launched one program about two months ago to provide a 4% grant for purchasing a home.
Meanwhile, Los Angeles County’s high-end market is weakening even more. In posh areas of Santa Monica, Brentwood, Malibu and Bel-Air, some homes that recently changed hands garnered offers that were 13% to 24% lower than a year ago.
Overall, analysts say it’s unlikely home sales and price gains in the coming months will match last month’s spectacular performance. There was one more business day in July compared with a year ago, when the monthly results were unusually subpar.
But analysts said price gains of 8% to 12%--still strong growth--are more likely because construction of new homes remains low given the demand, which has been propelled by sustained population and job gains and low mortgage rates.
The key, they said, is whether the national economy can avoid slipping into a recession and whether interest rates change.
“The price appreciation will be with us, but at much lower rates,” said Esmael Adibi, an economist at Chapman University in Orange. He expects factors that cause housing demand, such as job growth, to slow in coming months. “People will get a little nervous and demand will decrease,” he said.
At the start of summer, Los Angeles County’s inventory of available homes had dropped to just three months, a record low. In Orange County, there was a little more than a two-month supply, the second-lowest level on record. A nine-month supply is considered normal.
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Times staff writer Karen Robinson-Jacobs contributed to this report.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Buying Fever
Spurred by sales of lower-priced homes, real estate prices soared in Los Angeles County to a record high in July, and the number of homes sold jumped 20% to near-record levels.
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MEDIAN PRICE
2000: $198,000
2001: $231,000
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JULY MEDIAN PRICE
1997: $172,000
2001: $231,000
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MONTHLY SALES
2000: 9,015
2001: 10,825
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JULY SALES
1997: 8,859
2001: 10,825
Source: DataQuick Information Services Inc.
