Housing Market Still Hot in Los Angeles

Residential real estate here continues to be among the priciest in the U.S.
By: MAURA WEBBER SADOVI: The Wall Street Journal Online
Still near the top of the pile in a nation of soaring housing values, Los Angeles' red-hot rate of home-price appreciation dropped into the single-digit range last quarter. Median home values rose 8.3% to $474,800 in the metropolitan area during the second quarter from the year-earlier period, after rising 25.9% to $446,400 in 2004.

Residents looking to catch a break by renting are also out of luck. They face average monthly payments that are among the nation's highest thanks to a steady influx of new immigrants priced out of the home market, and a high proportion of young adults in the population, according to Property & Portfolio Research Inc. (PPR), a Boston-based real-estate research firm.

Despite the cooling appreciation rate, there's little indication that the fast pace of housing sales will let up any time soon in the area, according to Robert Kleinhenz, deputy chief economist at the California Association of Realtors. Considering that the Los Angeles county market is still very tight in terms of supply and prices are still going up, Mr. Kleinhenz says, this year "there's a pretty good indication we'll match or exceed the record home-sales levels."

The city's median income of $51,541 in 2004 was 14.4% above the national level according to PPR, and the market is considered over-priced based on a comparison of home prices to incomes published in a recent Consumer Reports article.

Los Angeles Market Snapshot

                                             2nd Quarter 2005        2nd Quarter 2004
    Median Home Price                        $474,800                  $438,400
    Days on Market*                               22.4                       20
    Unsold Inventory Index*                  2.1 months               2.5 months
    Average 30-Fixed Mortgage Rate         5.31%                    5.85%
    Average Foreclosure Rate                   0.06%                    0.11%
    Apartment Monthly Rent                    $1,528                   $1,428
    Apartment Vacancy Rate                      4.7%                     5.1%
    *Data for June
    Sources: National Association of Realtors, California Association of Realtors,
    Bankrate.com, LoanPerformance, Property & Portfolio Research Inc.

Coming tomorrow, a look at the commercial real-estate market in Los Angeles.

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