L.A., Orange County Home Prices Up 10%
Boosted by entry-level and move-up buyers, home prices last month rose more than 10% in Orange and Los Angeles counties as the bellwether market for higher-end housing started to soften a bit.
Analysts have been watching for signs of weakness in a surging home market that has defied a national economy soured by layoffs, poor corporate financial results and lagging stock prices. But housing overall has remained largely oblivious to the economic slowdown.
The Southern California market pumped prices for typical homes to $290,000 in Orange County and $215,000 in Los Angeles County, according to a report Monday from research firm DataQuick Information Systems Inc. in La Jolla.
Both prices were slightly off the record highs of March, but compared with the previous April, they were 10.7% higher in Orange County and 10.3% higher in Los Angeles County.
However, the number of homes sold last month fell 7% in Orange County to 3,740 from a year earlier, according to DataQuick. In Los Angeles County, sales edged down 3% to 8,921.
Among more expensive homes, those selling for roughly $500,000 to $800,000, sales dropped even more, but the overall shortage of homes and low interest rates have kept prices rising and the market strong, analysts said.
“We can’t call it a downturn yet,” said John Karevoll, the DataQuick analyst who conducted the report. “So far, we’re not seeing the effects of any slowdown in Southern California real estate.”
A housing report for Ventura, Riverside and San Bernardino counties is expected to be released this week.
During the first three months of this year, the Los Angeles and the Orange county markets were among 114 U.S. metropolitan areas that registered increases in median prices, the point at which half the homes sold for more and half for less. Only eight metropolitan areas showed declines, according to the National Assn. of Realtors, a Washington trade group.
Local real estate agents say that although housing sales remain brisk, they are working harder to get the deals, often holding more open houses and working with sellers to price homes more realistically.
“The market is a little more rational right now, as opposed to last year when any price within reason would get offers,” said Dan Shusterman, a broker at Coldwell Banker in Tustin. “Now, you have to be priced well in order to get the house sold.”
Homes under $300,000 are selling especially well because there are too little new construction and too few listings in that price range, said Neal Weichel, an agent at Remax of Valencia. But for existing homes over $600,000, he said, “there’s a lack of confidence in that market right now.”
DataQuick found that sales of higher-priced homes last month declined 25% in Los Angeles County and 21% in Orange County from a year earlier.
Weichel said many buyers at that level already have purchased homes. For those who haven’t moved up yet, the slowing economy has kept some off the market and made it harder for others to qualify for a mortgage. “The number of buyers in that range is thinner,” he said.
Still, existing homes in general are selling briskly, and the supply remains near record lows, according to the California Assn. of Realtors, a Los Angeles trade group. In Orange County, homes spent an average of 25 days on the market, the same as a year ago. The number dropped in Los Angeles County to 26 days, down three days from a year earlier, the group said.
Weichel said he listed a home in Valencia for $425,000 late last week--$50,000 more than an identical model recently sold for--and got an offer within days.
At the current selling pace, only a three-month supply of homes exists in Orange County, up from a two-month supply during the same period last year. For Los Angeles County, the inventory dipped to 3.4 months, slightly below last year’s figure. The average time on the market for either county has been more than nine months, the group said.
Another reason for the decline in overall sales is that people are losing money in stocks, said Robert LeFever, president of Coldwell Banker Residential Brokerage of Southern California.
“The stock market still has a large effect on a large number of people,” he said. Job losses have not played much of a role so far in home-buying decisions in Southern California, he said.
Mortgage rates have been fluctuating, but at around 7% they are well below year-ago levels, keeping down consumers’ costs. The monthly payment for a median-priced home in Los Angeles was $1,257 in April, assuming a 10% down payment on a 30-year fixed mortgage at 6.7%. In Orange County, the median monthly payment was $1,696 in April.
The DataQuick report covers sales that closed in April, reflecting similar agreements between home sellers and buyers over the previous 30 to 60 days.
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Home Sales
The median price for a house in Los Angeles County went up 10.3% in April from a year ago. Sales were down 2.8%.
*
Prices (in thousands)
April 2000: $195,000
April 2001: $215,000
*
Sales
April 2000: 9,182
April 2001: 8,921
Source: DataQuick
