Valley Home Prices Rise Markedly

San Fernando Valley homeowners, many of whom saw their property values devastated by the recession of the early 1990s and the Northridge earthquake, are now seeing a resurgence that has pushed prices for houses and condos halfway back to their previous highs, real estate and lending experts said Monday.

Figures from a real estate trade group released Monday show that, even as sales activity in the Valley has slowed, values, as measured by the median sales price, continue to rise, thanks to a diversified economy and low mortgage interest rates.

“I would say we’ve come back at least by 50%, maybe a little more,” said Joe Riggio, regional vice president for Calabasas-based Countrywide Home Loans, the largest independent home mortgage lender in the U.S.

“The downward spiral lasted for many years. And we’ve only had 2 1/2 years of coming back, but in that period of time we’ve come halfway. I’d say that’s significant.”

While that may feel like a great improvement to beleaguered homeowners, Los Angeles County--including the Valley--still lags other parts of the state.

“Los Angeles County is really the last major metropolitan area in California not to surpass its peak,” said Leslie Appleton-Young, chief economist for the California Assn. of Realtors, who noted that areas such as Silicon Valley surpassed their previous sales-price highs in March 1997.

The local delay shows how much more severe the economic downturn was in Los Angeles County, Appleton-Young said.

In the Valley, the median price of a single-family home was $192,000 in October, according to figures from the Southland Regional Assn. of Realtors, which is part of the same national organization as the California association. That’s up 12% from October 1997 and a gain of 22% from the decade-low October sales figure of $157,000 posted in 1996. But it’s still well below the $226,900 figure posted in October 1990, at the height of the real estate market.

Between 1990 and 1996, values for single-family homes in the Valley dropped by about 30% on average, figures from the Southland association show.

Experts said that on average, condo prices fell even more. For example, one North Hollywood woman, who bought her condominium in the early 1990s for about $170,000, sold it a few years ago at a $70,000 loss.

“Generally what happens is that condos do take a significant hit, more so than single-family homes,” said Riggio. “There’s more volatility up and down.”

The good news, he and real estate experts said, is that when the market begins to improve, condos often are more attractive to cash-strapped, first-time home buyers. The median sales price for condominiums in the Valley increased by more than 32% in October, compared with October of last year, association figures show.

Though encouraged by the increasing values, real estate experts said it could take 18 months to two years before the Valley returns to pre-recession pricing levels.

“I don’t see it happening for another few years, I really don’t,” said Mel Wilson, a broker with Coldwell Banker and past president of Southland Realtors.

“The Valley had a more dramatic decrease in values than other areas” of Los Angeles County, Wilson said. “It had to do not only with the economy being weak, but we also had that earthquake, which had a negative effect on values.

“So we had a little bit more ground to make up than other areas. We’ll get there, but not as fast as some other areas.”

Echoing figures contained in the report, Wilson said he’s seen a slowdown of sales activity in the Valley in recent months.

Calling it a “slight seasonal cooling,” the report shows that 1,038 single-family homes changed hands in the Valley in October, up 1% from 1997 and down 5.3% from September. It was the fourth consecutive month in which sales were either flat or down.

Bud Mauro, president of the association, said in a prepared statement that the market will likely “take the last two months of the year off.”

Appleton-Young said part of the current downturn is seasonal, but the market is also reacting to uncertainty in Asia and the stock market. She said there is a “higher level of uncertainty,” in the real estate market, adding, “We have people being a lot more cautious.”

Even with the post-summer slowdown, 1998 is still on track to be the best year for the Valley real estate market in this decade.

Countywide, Appleton-Young said, 1998 is shaping up to be the best sales year in two decades.

She sees the slowdown as a healthy adjustment for the market. “It’s a good thing to slow down a little bit,” she said. “As we saw in the ‘80s, you can’t sustain it.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

October Valley Home Sales

Northwest: +17%

1998 Avg. Price: $249,000

1997 Avg. Price: $213,200

1998 home sales: 233

*

Southwest: +27%

1998 Avg. Price: $342,800

1997 Avg. Price: $269,100

1998 home sales: 237

*

Northeast: +15%

1998 Avg. Price: $147,900

1997 Avg. Price: $129,100

1998 home sales: 173

*

Southeast: + 5%

1998 Avg. Price: $295,800

1997 Avg. Price: $280,300

1998 home sales: 237

*

South Central: +20%

1998 Avg. Price: $275,300

1997 Avg. Price: $229,800

1998 home sales: 158

*

Source: Southland Regional Assn. of Realtors