Home Prices Hit Record High in Los Angeles County in 2000

A decade after the long recession first hit the Southland, the annual median home price in Los Angeles County last year blasted past its pre-recession high to a record $199,000, according to a survey released Tuesday.

Throughout last year, the nation’s largest housing market pushed up prices--three times--to record monthly levels and ended up with a 6% gain over the previous year, according to DataQuick Information Systems Inc., a La Jolla research firm. The previous annual high was $193,000 in 1991.

For December, the median price--the point at which half the homes sold for more and half for less--hit $205,000, or 7% higher than the previous December.

A cut in the interest rate this month could give an additional boost to the housing market, even though a slowing national economy is leading to some layoffs and more cautious consumer spending nationwide. How high prices can go and for how much longer are uncertain, but experts say there is no sign of a real estate slowdown yet.

“I think we’re seeing an increasingly stronger market,” said John Karevoll, the DataQuick analyst who completed the report.

In Orange County, for instance, the priciest market in Southern California hit records both for December, at $292,000, and for the year, at $271,000, according to DataQuick. And economists say prices will continue to rise.

Recent regional reports that show unemployment declining, incomes growing and construction falling short of demand across the Southland lead Karevoll to believe that the housing market will be able to maintain its current pace.

“The depth of the market is a lot stronger than anyone anticipated,” he said. “It’s more of the same for the next three or four months. There isn’t anything that indicates any corner has been turned.”

Existing-home prices should slow down only slightly this year in Orange and Los Angeles counties, said Esmael Adibi, an economist at Chapman University. With interest rates dropping and jobs forming at a quick pace on a regional basis, demand for new homes will remain significantly high, he said.

But other economists are more cautious, saying that weakness in the national economy will dampen Southern California’s economy by midyear. Concerns over capital investments, consumer spending and foreign trade probably will lead to lower employment growth nationally, and that would gradually affect the Southland, said Tom Lieser, a senior economist at UCLA’s Anderson Business Forecast.

“We would not be immune, but we would be spared from the worst effects,” Lieser said.

The nation’s housing market, like the Southland, has remained resilient despite an eroding economy. The National Assn. of Realtors expects a 2.5% increase in resales this year to more than 5 million houses, the second-highest level on record.

Overall, the regional housing market “won’t measure up to what people have come to enjoy, but it will be a relative good year nonetheless,” said Mark Zandi, chief economist at Economy.com, a West Chester, Pa., consulting firm. He expects the gains in median prices to be about half what they were last year.

But mortgage rates, which have fallen to about 7%, their lowest rate in two years, will help keep Southland buyers in the market for new homes.

New buyers such as Brandon Portnoff, for example, jumped into the market. Portnoff, 25, toured Ladera Ranch, a new master-planned community in south Orange County, and agreed to buy a two-bedroom, 2 1/2-bath townhome for more than $250,000.

He said that talk of a national recession didn’t faze him.

“It wasn’t real significant,” Portnoff said. “I don’t have a lot of money invested in stocks and mutual funds, so the concerns weren’t going to affect me directly.”

Portnoff’s purchase helped to bump up sales of new homes in December, a month when builders typically seek to clear out inventory.

Overall, however, December sales in both counties registered small declines from a year earlier; analysts pointed to a relative dearth of new and existing homes on the market.

In Los Angeles County, the number of homes sold last month was 8,962, a 5% decrease from 9,456 sold the previous December. For the year, 109,468 homes changed owners last year, a 1.4% decline from 111,008 a year earlier, DataQuick reported.

Statewide, there is a 3 1/2-month supply of single-family homes, according to the California Assn. of Realtors. Generally, a nine-month inventory is needed to prevent prices from rapidly rising because of high demand.

Slower growth in home prices, economists said, would produce a needed cooling effect for more moderate-income families to enter the market.

“We would not expect a real estate recession or major downturn, but the bottom line will be probably lower rates of price [increases] than what we saw last year,” said Lynn Reaser, a chief economist at Banc of America Capital Management in St. Louis.

“And a lower rate . . . may prevent California’s housing market, particularly in Orange County, from becoming further and further priced out of the reach of potential home buyers,” she said.

The monthly DataQuick study reports on home sales that closed in December, reflecting agreements between sellers and home buyers over the previous 30 to 60 days. A similar report is expected to be released later this week for Ventura, Riverside and San Bernardino counties.