L.A. County Home Values Continue Growth Spurt
Home values in Los Angeles and Orange counties continued growing at a vigorous pace last month, led by sharp gains among moderately priced houses, according to a report released Tuesday.
Sales of homes in Los Angeles County also exceeded expectations as consumers brushed aside concerns about the sluggish economy to take advantage of low mortgage rates. Analysts said the latest results suggest that the region’s housing market will hold up well during the peak summer home-buying months.
“It’s feverish,” said Wendy Furth, an agent at Coldwell Banker in Northridge and president of the Southland Regional Assn. of Realtors.
In June, the median price of all homes sold in Los Angeles County jumped more than 12% from a year earlier to a record $228,000, according to DataQuick Information Systems Inc., a La Jolla-based research firm. In Orange County, the median price of homes closing escrow last month increased 10% to $301,000, also a record.
Last month, more than 11,100 new and existing homes were sold in Los Angeles County. Although that was down 2% from June 2000, that was still the third-highest in monthly sales in 12 years.
In Orange County, however, home sales have been falling sharply in recent months, and that pattern continued into June. DataQuick said 4,389 houses and condos changed hands last month, down 15% from a year earlier.
Analysts said the contrasting sales activity between the two counties largely reflects the difference in prices. The economic slowdown has crimped demand for high-priced homes, and markets such as Orange County and the Bay Area, which had the biggest growth in the late 1990s, are lagging.
“There are clear signs that things in Orange County are weakening,” said G.U. Krueger, an analyst at Institutional Housing Partners Inc., a real estate venture-capital firm in Irvine. “What is not clear is the extent of the weakening and how long it will last.”
In Orange County, homes priced in the $200,000 range increased in value by more than 10% during the last year, according to DataQuick. But those priced at about $400,000 appreciated by just 4%.
The distinction is even sharper in Los Angeles County. Starter homes in South-Central Los Angeles, Palmdale, San Pedro and Long Beach recorded strong gains in price appreciation, the new figures show, and they are catching up with other areas.
Overall, homes priced at the bottom 25th percentile in Los Angeles County--about $142,000 in June 2000--appreciated 14% to $162,000. But homes in the top 25% of the market, those priced at $324,000 a year ago, grew by 5%.
“There are a lot of buyers right now in Long Beach and the surrounding areas, and there isn’t enough inventory to meet their needs,” said Coldwell Banker Coastco agent Nita Nash. “We’re getting into multiple offers.”
Just a year ago, real estate agents had doubts about whether home prices in the lower end would increase by double-digit percentages. But according to Furth and others, almost all properties that are well-priced and in good condition are now selling within a week or two.
“I see no signs of it slowing down in the next six months,” said Furth, whose trade group represents more than 6,800 agents in the San Fernando and Santa Clarita valleys.
Although analysts said rising joblessness could dampen the market, at the moment the bigger problem for many buyers in the region is the dwindling supply of houses on the market.
Construction of new homes in the region remains weak, and inventories of homes have been shrinking this year in both counties, according to the California Assn. of Realtors. At the current selling pace, Los Angeles had a three-month supply of homes on the market in May, the latest month available. That was down from 3.6 months a year earlier. And Orange County had just over two months of inventory, down from 2.5 months.
But in Orange County, the supply of luxury homes appears to be expanding as homes take longer to sell.
“The market over $1 million has almost come to a screeching halt,” said Barbara Amstadter, an agent at Prudential California Realty in Newport Beach. “I think buyers are perceiving the market as overpriced, and sellers are hoping to get top dollar. People are taking a longer look at the investments they are making, including real estate.”
Still, buyers at all price points are being drawn into the market by low interest rates. In June, the average buyer in Los Angeles and Orange counties obtained a conventional 30-year mortgage at 6.8%. Assuming a 10% down payment and the latest median price, a typical Los Angeles buyer last month was looking at a monthly payment of $1,327, just $11 more than a year ago. In Orange County, the typical payment was $1,751 per month, or $19 less than a year ago.
What’s more, despite evidence nationwide of homeowners struggling to make payments, DataQuick’s report showed that the number of people receiving a notice of default, the first step in the foreclosure process, fell in both counties to near record lows.
DataQuick’s report covers sales that closed in June, reflecting agreements between home sellers and buyers in the last 30 to 60 days. A similar report is expected to be released in the coming days for Riverside and San Bernardino counties.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Robust Housing Market
Rising prices for entry-level homes boosted Los Angeles County’s housing market last month. The median price of new and existing homes sold rose to a record $228,000, up 12% from a year ago. With the number of homes sold declining only 2%, experts predict a robust summer of home selling.
Source: DataQuick Information Services
