L.A. Housing Sales Still Hot

The median price of homes sold in Los Angeles County hit a record high for the second month in a row in October, jumping more than 20% from year-ago levels to $273,000, according to a report released Wednesday.

The size of the year-over-year price increase -- the largest since May 1989 -- surprised many housing industry observers, who had been expecting the pace of residential real estate appreciation to taper off. The report was issued by DataQuick Information Systems Inc.

Sales results for Orange County and the rest of Southern California were not yet available.

The strong demand, real estate brokers says, is being fueled by near record-low mortgage rates, which seem to be offsetting concerns about the economy and the threat of war with Iraq.

“The market is still hot because the interest rates are still low,” said Century 21 broker Marty Rodriguez in Glendora.

The decline in rates -- which last week averaged about 6.1% for a 30-year fixed-rate mortgage -- has had a particularly big effect in driving sales of less-expensive homes. Lower- and middle-income buyers can now qualify for loans.

“Rates have the biggest impact on first-time buyers, and we’ve been in a strong market in that regard,” said Mark Dilbeck, president of Dilbeck Realtors GMAC Real Estate in La Canada-Flintridge.

Meanwhile, at the high end of the market, where buyers are less sensitive to interest rates, cheaper mortgages have not had nearly as much of an effect. As a result, properties priced above $1 million seem to be taking longer to sell, Dilbeck noted.

Rodriguez and other brokers said home buyers overall have continued to open escrows at a brisk pace, a sign that sales activity might remain busy even during the normally slow holiday season.

Alan Long, president of DBL Realtors in Los Angeles, said he is encouraging his agents to hold more open houses during the coming weeks to take advantage of demand generated by the lower interest rates. “I think that the market is going to be really strong” this winter, Long said.

Los Angeles County’s robust performance in October came amid growing concern among some analysts that a speculation-driven real estate “bubble” is forming in other cities. The bubble could burst, they say, with continued economic weakness.

But so far, real estate activity in the L.A. region seems to reflect genuinely strong demand -- not people buying simply in the hopes of seeing a quick profit, said DataQuick analyst John Karevoll. “The demand for housing is being generated at a steady pace,” he said.

Instead of worrying about a bubble bursting, potential buyers in Los Angeles seem more concerned about simply finding a suitable house to purchase, say brokers. Supply is limited.

Rodrigue Colaianni, 29, made offers on four properties last summer before he snagged a $395,000 duplex in Echo Park that had not yet been included in the real estate listing service.

“The market is crazy,” said Colaianni, who helps foreign students find internships in the U.S. “The sellers basically do whatever they want. You do an offer at full price and you don’t even get a response. I found it very difficult.”

The number of Los Angeles County homes sold in October (including new and existing houses, as well as condominiums) rose by about 10% from the same month last year to 10,422, according to DataQuick.

The monthly sales for the county were the highest since October 1989, when 11,403 homes were sold.