Home Prices Are Up 10.3% in County
Despite steep gains, home prices in Southern California climbed at a far slower pace this spring than they did during the peak of the late-1980s boom, according to a government report released Tuesday that suggests the region’s housing market is not overheating.
Home prices in Los Angeles County rose by 10.3% from the second quarter a year ago, the strongest increase recorded in the April-through-June period since 1989, according to the Office of Federal Housing Enterprise Oversight, which compiled the data.
But 13 years ago, prices shot up 24.9% as the market reached its zenith before a long downward spiral. That was the largest quarterly gain recorded in the region since the agency began tracking figures in 1980.
Price increases across the Southland last quarter outpaced the state average of 7.6%, which was dragged down by a decline in Silicon Valley that put growth closer to the national average of 6.5%. But the rise in Los Angeles County is still too small to suggest a sharp decline in regional prices is imminent, analysts said.
“These rates are indicative of strong appreciation, but not in the magnitude of what we have considered to be a bubble in the past,” said Shelly Dreiman, a senior economist at the agency who compiled the report.
Typical warning signs of an overheated market have not surfaced in the region. Those include annual appreciation topping 20% for several quarters in a row, an excessive amount of home building that could cause prices to plunge if demand wanes, and prices that far exceed incomes when the economy is in recession. The economy, while sluggish, is not nearly as bad as in the early 1990s in Southern California, Dreiman said.
An analyst at DataQuick Information Systems Inc. who compiles a monthly report of Southern California home sales trends agreed.
“There are steady numbers but not ones that show the market is overheating,” John Karevoll said. “The numbers in the late 1980s were not sustainable, but the current figures are.”
The study, a broad measure in home prices, is based on transactions involving thousands of existing houses. Those single-family homes have mortgages that have been purchased or bundled and sold to investors by Freddie Mac or Fannie Mae, which account for the largest database of mortgages.
Los Angeles County’s 10.3% increase from a year earlier ranks it 34th in appreciation among the nation’s major metropolitan areas. Prices in the county grew 55% in the last five years, compared with a statewide average of 64%.
In San Diego County, prices rose 11.2% during the quarter, giving it a national ranking of 19. They are up 75% in the last five years. Ventura County prices rose 10.4%, the 28th highest in the country.
Orange County prices rose 10%, putting it in 37th place. They are up 64% compared with five years ago. Riverside and San Bernardino counties were up 9.3% for the quarter, ranking 45th in the nation.
