Pace of Valley Home Price Rise Slows in January

Home price escalation in the San Fernando Valley took a breather in January, as prices posted their smallest gains in 19 months, a real estate trade group said Monday.

The median cost of a single-family home (the price at which half of the homes sold for more and half for less) was $234,00 in January, according to the Southland Regional Assn. of Realtors. That’s down from $241,500 in December--a decline of 3.1% and the lowest price point since March 2000. The year-to-year gain of 5.4% is the smallest since June 1999.

In short, the price continues to go up, but the hikes have gone from torrid to tepid. That’s because of both consumer reaction to the previous price hikes and to a lack of supply, experts said.

“There’s a price tolerance on the part of the consumer,” said Jim Link, executive vice president of the association. “The consumer was saying, ‘Wait, things have to have a ceiling.’ I think we are reaching that ceiling now.

“The prices will continue to go up,” he added, “but certainly not at the pace they had been last year and in 1999.”

For eight months last year, home prices were up about 10% or more compared with 1999 postings. That led to an overall increase for the year of 12%, making 2000 the third straight year of double-digit increases.

This year, the association predicts that single-family home prices will rise by 5% to 8%--harking to 1997, when the region was coming out of a recession.

Bob Burkett, who has been selling real estate in the Valley for about 17 years, is not too surprised that the pricing pace is slowing down.

“It’s very difficult to maintain that kind of appreciation--10, 12, 13%--over a long period of time,” he said. “Some of these home prices have gotten to the point where nobody can afford them.

“I think we’re approaching more realistic levels of appreciation now.”

Even as the prices were becoming a bit more affordable, fewer buyers were biting.

The number of single-family homes sold in January fell to 682--down 30.8% from December and down 3.3% from the year-ago period. It was the lowest monthly sales tally since early 1997.

Still, Link said, given the recurrent conversations about “soft landings,” the January figures look “pretty good.”

“The sales were stronger than we had thought they would be, given all the talk of the economy cooling down,” Link said. “So we’re pleased with the numbers.”

While the home resale market took a respite, the condo market showed continued signs of strength, with a 20% increase in sales compared with a year ago. The median price of $144,000 is up 21.4% from January 2000, for the largest year-over-year increase since March 1999. And the price was up 4.3% from December.

“Single family prices have increased to the point where they are close to or out of reach of a growing percentage of first-time buyers,” said Link. “You have a spread of almost $100,000 between the median condo price and the median for a single-family home.

“Those buyers who would have bought a single-family home a year or two ago, today are buying condos.”

In the Santa Clarita Valley, the median price was up slightly compared with year-ago levels, posting a January figure of $245,000. That’s up 4.3% from January 2000 but down 1.6% from December 2000.

The report said 149 single-family homes changed hands, up 38% (or 41 homes) from January 2000. The pace was down 70 homes compared with December.

In the condo market, keys were exchanged for 90 units, with a median price of $147,500. That’s up nearly 12% from January 2000 and up 5.4% from December.