L.A. Property Values Continue to Soar

L.A.’s real estate juggernaut continued to roll last year as assessed values in the county jumped 9.3 percent to top $1 trillion for the first time.
By: HOWARD FINE: Los Angeles Business Journal Online
According to figures from Los Angeles County Assessor Rick Auerbach, the total assessment roll for the county hit $1.04 trillion as of the end of 2006, up 9.3 percent from the previous year. Though that’s below the 11 percent increase during calendar year 2005, it’s still well above the 28-year average increase of 7 percent.

Auerbach said the increase was driven largely by home sales. Even though the volume of sales fell slightly, that was more than offset by the large changes in price. Also, L.A. County hasn’t seen the huge spike in new home construction that other counties have, meaning the supply of homes is more limited.

Also contributing to the increase was a larger-than-usual gain of 6 percent in business equipment values. “This is an exceptionally strong figure,” Auerbach said, “especially considering that most business equipment depreciates over time. To offset this, a huge amount of new equipment must have been purchased.”

The substantial gain in assessed values represents good news for local government coffers. Excluding utilities, non-profit holdings (churches, etc…) and certain homeowner exemptions, the total assessed value was nearly $998 billion. Roughly one percent of that, or $1 billion, is split among various local governments, that’s up about $84 million from 2005 levels.

Among local communities, the northern outposts of the county – Lancaster, Palmdale and Santa Clarita – saw the biggest gains in assessed valuation last year, with Lancaster topping the list at 21 percent. Auerbach said new residential and commercial construction were the main factors.

Two inner-city communities also saw substantial gains: Paramount (17 percent) and Compton (13.6 percent). Auerbach said the conversion of an idle asphalt plant into a functioning diesel fuel facility accounted for much of the increase in Paramount, while Compton saw an above-average turnover of long-occupied homes. Under Proposition 13, homes that haven’t changed hands in many years see huge increases in valuation when they finally do change hands.

While no cities saw decreases in assessed value, the four cities making up the Palos Verdes Peninsula saw some of the smallest single-digit gains in valuations. Auerbach said this reflects a sharp drop in the volume of home sales in these cities.