L.A. Home Prices Still on the Rise
Home values in Los Angeles County last month recorded the biggest growth spurt in 12 years, as the median price of houses sold jumped by 13% from a year earlier to a record $219,000, according to figures released Monday.
The surprisingly strong report was further indication that the region’s housing market is barreling ahead despite the weakening national economy. While some have expected the market to taper off, many analysts and brokers now say they see further home appreciation in the summer months and ahead, especially in Los Angeles County.
The latest report, by DataQuick Information Systems, shows that the lower-end and mid-price houses are appreciating faster than the luxury home market, which has cooled in recent months.
With the latest gains, typical home values in Los Angeles County are about 10% higher than peak levels of a decade ago, significantly less than many other metro areas in the state and nation. But Los Angeles County, with its bigger supply of moderately priced houses, recently has been gaining momentum even as activity has slowed a bit in neighboring counties, where average homes are out of reach to many families.
In Orange County, the median price of new and existing homes sold in May rose 11%, to a record $297,000. But sales fell 16% in May, the fourth straight month of declining sales, according to DataQuick, a La Jolla research firm that compiles sales and prices from closings.
In Los Angeles County, more than 10,000 homes changed hands last month, essentially the same brisk pace as a year earlier. Condo sales had the biggest percentage increase, but existing houses, which accounted for about 75% of the sales last month, had the sharpest price increase--surging by more than 14% to $230,000.
John Karevoll, the DataQuick analyst who prepared the report, said that increasing homeowner equity will further spur the market, as that will allow more people who have been waiting to trade up to pay off their mortgages and still have enough left over to make a down payment on another house.
“Activity that was deferred will now begin to loosen up,” he said.
Karevoll expects a similar pattern of double-digit price gains and steady sales through summer. Some brokers say things already are heating up in Los Angeles County.
“Buyers are getting frantic again. It’s summertime, and they want to get into a home,” said Richard Daskam, an agent at Century 21 Sparow-Shoreline in Long Beach. “I’ve got buyers I turn away,” he added.
Some analysts say consumers in all of Southern California, as elsewhere, are becoming more cautious because of uncertainties in the economy. Job growth in the state has slowed, and layoffs have risen, although unemployment remains low by historical standards.
But the housing market continues to benefit from low mortgage interest rates. Assuming a 10% down payment and the average interest rate obtained by buyers last month, 6.8%, the monthly payment on a median-price home in Los Angeles County was $1,248 a month, $73 less than a year earlier. In Orange County, the average monthly payment was $1,825, or $70 cheaper than last year.
DataQuick’s report shows that the Southland housing market is uneven. It estimated that values for high-end homes in Los Angeles County--generally $375,000 and up--were up 4% in May from a year earlier. But the value of houses priced up to $300,000 grew by 13%.
“People are looking at value today more than ever,” said Valerie Fitzgerald of Coldwell Banker in Beverly Hills. “They’re saying, ‘If I buy a house today, will I be able to get my money out of it?’ ”
That sort of questioning is leading to more buyer pause, especially in higher-price markets such as Orange and San Diego counties, where sales have slowed markedly from last year’s pace.
“I’m talking to a lot of agents, and they’re doing price reductions where they didn’t have to previously,” said Patrick Knapp, a broker at Remax Real Estate Services in Irvine. He added that potential buyers are waiting to see whether interest rates will fall and to see what happens with the economy.
“In Orange County, it will be more moderate, but Los Angeles County will be a steady, healthy housing market,” said Steve Cochrane, an economist at Economy.com, which tracks regional economic performance.
Overall, however, analysts say houses are still getting sold quickly and that financial conditions among homeowners remain strong.
The typical home stayed on the Los Angeles market about 26 days, compared with the 63-day historical average, according to the California Assn. of Realtors, a Los Angeles trade group. In Orange County, the number was 24 days compared with the 56-day average.
Inventory levels in both counties remained thin, reflecting low construction levels of new homes and strong demand. In Los Angeles, there was about a four-month supply of homes at the current selling pace. A 10-month average is normal. And in Orange County, there was a 2.5-month supply compared with a 9-month level.
The number of notice of defaults, the first step toward filing for bankruptcy, were 333 in May in Orange County, about 15 more than last year. In Los Angeles, the number grew to 2,070, or about 200 above year-earlier rates. For both markets, current levels still remain among the lowest recorded.
DataQuick’s report covers sales that closed in May, reflecting sales agreements between home sellers and buyers in the past 30 to 60 days. A similar report is expected to be released in coming days for Riverside and San Bernardino counties.
