California’s Home Values Expected to Rise, but Slowly

California home values will brush bottom this quarter and move slowly upward next year if price trends hold, according to figures released Friday by a leading real estate data service and a national accounting firm.

But there are huge price variations by region, according to the index developed by DataQuick Information Systems and KPMG Peat Marwick. Sacramento and some other inland areas are tumbling even as the San Francisco Bay Area and established Los Angeles suburbs recover lost values.

Southern California home values in general, however, have lagged behind the state, and prices are not expected to hit bottom until the first half of next year, said DataQuick analyst John Karevoll. In contrast, San Francisco Bay Area prices hit bottom early this year.

The DataQuick-KPMG forecast for a recovery next year is in line with other projections. The 1996 forecast by the California Assn. of Realtors says that the statewide median sales price of a single-family home should creep up 0.5% from this year to $178,540.

The state’s real estate recovery remains highly uneven, according to price statistics. In the Sacramento suburb of North Highlands and in Adelanto near Victorville in Southern California, for example, values declined by nearly 18% during the third quarter of this year compared to the same period in 1994. By contrast, exclusive Half Moon Bay south of San Francisco rose nearly 10% during the third quarter, with big gains in pricey areas like Redwood City in the north and Calabasas in the south. Established Los Angeles suburbs like Glendale, Burbank, Pasadena and Manhattan Beach showed solid increases as well.

DataQuick and Peat Marwick developed the index for Wall Street and bank executives involved in the secondary mortgage market, where home loans are packaged and sold as securities. Prices, age, location and amenities were considered, DataQuick analyst John Karevoll said.

Karevoll predicted that prices overall would bottom out this quarter and begin a slow rise next year so long as trends evident in ZIP Code studies continue.

During the second quarter of this year, home values rose in 195 California ZIP Codes, declined in 332 and were flat in the rest. During the third quarter, values rose in 296 ZIP Codes, declined in 308 and were flat in the rest, according to Peat Marwick and DataQuick.

Overall, the index showed that home values declined 2.6% from third-quarter 1994 to third-quarter 1995. From this year’s second to third quarter, though, values dropped just 0.2%.

The year-over-year decline was as high as 6.3% two years ago, whereas the quarter-to-quarter decline hit 2% at the end of 1992.

Any recovery to the prices of the late 1980s is not in sight. Home values statewide are currently 17% below their second-quarter 1990 peak.

In addition, high rates of foreclosures will continue to put a hold on prices in many neighborhoods. During October, lenders began foreclosure proceedings on 12,904 California homeowners--the highest monthly number ever reported. The high level of foreclosures is expected to continue through next year.

“Foreclosures are wreaking havoc at the lower end of the market,” Karevoll said of homes priced in the low $100,000 range.

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Winners and Losers

Year-to-year changes in home prices in selected California ZIP codes:

WINNERS

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Zip City Change 94019-20 Half Moon Bay-La Honda +9.9% 91302 Calabasas +9.5 94061 Redwood City +7.9 94306 Palo Alto +7.6 94401 San Mateo +6.9 91207 Glendale +6.7 94043 Mountain View +6.1 90291 Venice +6.0 90266 Manhattan Beach +5.9 94925 Corte Madera +5.8 94024 Los Altos +5.7 91501 Burbank +5.4 91105 Pasadena +5.3 91741 Glendora +5.2 94596 Walnut Creek +5.1 95014 Cupertino +5.0 94941 Mill Valley +4.9 95129 San Jose +4.9 95472 Sebastopol +4.9 95051 Santa Clara +4.0

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LOSERS

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Zip City Change 95660 North Highlands -17.9% 92301 Adelanto -17.7 92345 Hesperia -16.0 95864 Sacramento -15.8 92308 Apple Valley -15.4 92407 San Bernardino -14.4 92571 Perris -12.4 92629 Dana Point -11.2 95820 Sacramento -11.1 93535 Lancaster -11.0 95818 Sacramento -10.9 93560 Rosamond -10.9 90016 South-Central Los Angeles -10.8 92583 San Jacinto -10.8 90807 Long Beach -10.6 92028 Fallbrook -10.6 90003 South-Central -10.0 91316 Encino -10.0 92680 Tustin -10.0 93552 Palmdale -10.0

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Sources: DataQuick Information Systems, KPMG Peat Marwick