Soaring Home Prices Leave Lots of Folks Out of the Loop

RISMedia
Looks like summer's gonna end on a note of de ja blue for anyone who was looking to buy a house in August, especially first-timers. Each day, the unaffordable grew even more so.

That record $600,000 median price for a single-family home in the San Fernando Valley during July? It's history.

August's market bested it.

At least that's what the evidence assembled by Dan Blake suggests. He's the director of the San Fernando Valley Economic Research Center at California State University, Northridge, and crunched August's price numbers.

He has the median right at $600,000. But that is not equal to what happened in July. That number came from the Southland Regional Association of Realtors, which releases price and sales data from Toluca Lake to Calabasas.

Blake's numbers were compiled by DataQuick Information Systems and his sampling includes all the ZIP codes from the Southland sample plus those in Burbank and Glendale.
In July, Blake's sample was $585,000.

So it stands to reason that the Realtor's number for August would be bigger than July's.

I know this is making owners a bit giddy.

It's really not good news, Blake said.

Consider this. Between August 1995 and last month, the median price of a Valley home soared 257.1 percent, according to DataQuick's calculation.

Blake points out that in 1995, the last boom market bubble was still bursting. It was one year after the Northridge Earthquake and a few years after the closure of the General Motors plant in Van Nuys and the evaporation of thousands of aerospace industry jobs.

"Those were really depressed times. You can't look at that as normal times," Blake said.
OK, let’s jump to 2000. The median price that August was $293,500. And it seemed like a lot back then.

But there was no price bubble blather.

"Those were pretty much sustainable prices by the level of income and in the Valley."
But over the next five years the median price soared 140 percent, something that for the Valley could be news.

"It isn't good for job creation," Blake said. "With the cost of gasoline up, we can't tell (new residents) to go to Lancaster and buy something affordable. It's a discouraging factor."
This past spring, for the first time, high housing prices were cited as a reason people didn't want to move to the Valley, Blake said.

It's also discouraging that with prices at this level, it's harder and harder to provide housing for low- to moderate-income families.

Blake said that the affordable option now is a $350,000 condo. But those aren't easy to find.
The only mitigating factor is that rents have not risen nearly as fast, which explains why more than 50 percent of Valley residents are renters.

For example, figures compiled by UCLA show that for Los Angeles, rents only rose 3.5 percent from the second quarter of 200 to the second quarter of 2005.

And Thursday, executives at a residential real estate conference sponsored by UCLA's Ziman Center for Real Estate agreed that with land and other costs that have risen along with selling prices, it's tough to bring affordable product to market.

The city of Los Angeles is considering adopting an inclusionary zoning ordinance that would require that developers include a certain amount of affordable housing new developments.
Some builders resist this.

Lawrence A. Scott, senior vice president of Avalon Bay Communities, a big apartment company, noted that apartments are the purest form of affordable housing. After all, the said during the conference, that's for first place we all lived after leaving Mom and Dad's house.

And maybe this isn't really a role for government, either.

"Politicians need to resist the urge to develop ordinances to solve the housing crisis. The free market will," he said.

Maybe.

It hasn't done it yet.

Words have been thrown at high housing costs for years.

And there's always been one constant.

"We still need affordable housing," said Joan Ling, executive director of the Santa Monica-based Community Corp. of America. "The last time I looked, there were still poor people. A lot of poor people."

Know we know what happened to the Villa Siena, the senior retirement community planned for the southeast corner of Corbin Avenue and Prairie Street, across from the Northridge Fashion Center.

The plans evaporated, reports Steve Taylor, who was involved in the project.

He was a minority partner with a private investor group from Eugene, Ore.

"After 9/11, they lost the appetite for those kinds of deals and we ended up shutting it down," Taylor said last week. "I haven't talked to those guys in two years."

Taylor, who's based in Del Mar, remained bullish on the Valley, though.

He's building the Vantaggio townhome complex down the street on the northwest corner of Shirley Avenue and Prairie Street.