Home Prices Up Tepid 3.4% Over June Last Year

Following four straight months of double-digit price hikes, median prices for single-family homes in the San Fernando Valley cooled in June, posting a tepid 3.4% increase over the June 1998 figure, a real estate trade group said Monday.

But the moderation did not come in time for many would-be buyers of single-family homes, who have begun shifting to condominiums instead.

Buyers closed escrow on 401 condo units in June, the highest condo sales figure for any June on record and the highest tally in any month since October 1989. Last month, that segment of the market accounted for an unusually high 25% of the sales activity.

“For the first time in six years, the moderate-income buyers are finding that condos are an attractive option,” said Jim Link, executive vice president of the Southland Regional Assn. of Realtors, which released the figures.

“It’s an indication of how one segment of the market was being addressed in the single-family market. Now, price wise, [buyers] have to turn to condos.”

Said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University: “In heated, tight markets, as rising demand starts to increase prices, condos become a lower-priced alternative to higher housing costs.”

The June median condo price in the Valley was $127,500, up from $125,500 a year ago. That’s the second-highest price point of the year, and a healthy 43.2% gain over the all-time low for June set at $89,000 in 1996.

Stephanie Vitacco, a top broker with Fred Sands Realtors, remembers selling condos in Encino for $50,000 in the mid-90s. Today, she said, the price tag is closer to $110,000. Still, condo prices are nearly 21% lower than the all-time high of $154,000 posted in September of 1991.

By comparison, the June median price of a single-family home in the Valley was $215,000, down 2.3% from May, but up 37% over 1996, when the regional recession dragged the June median to a low of $157,000. The June figure is up only slightly from last year’s June tally of $208,000.

Single-family home prices remain about 14% shy of the all-time high of $245,000, set back in November 1989.

All year, local real estate experts have predicted that the Valley market will not see the kind of red-hot sales pace witnessed last year, when the Valley posted its best showing of the decade. Interest rates have begun to edge back up and many of the bargain-basement properties already have been claimed.

Sales in June, traditionally the end of the busiest home-buying quarter, made that prediction appear more like reality.

During the month, 1,258 single-family homes were sold, down 4.3% from June of 1998, but up 11.2% from the previous month.

In every month so far this year, sales of single-family homes have fallen behind the breakneck pace set last year. By comparison, only May condo sales trailed the previous year’s figure: 316 sales in this May compared with 333 in May 1998.

Local experts say the slackening sales are also, in part, a function of reduced inventory.

The California Assn. of Realtors’ “unsold inventory index” for Los Angeles County shows that the current supply of homes in the county would be exhausted in less than five months if no new homes were added. That’s a fraction of the 27-month supply seen in January 1991.

“It’s a pretty tight supply,” said Link, estimating that the Valley’s current supply of “for-sale” houses and condos, just under 6,000, would be sold in under three months.

“In a balanced market, with a good inventory and buyer activity, we’d expect to have an aggregate of 8,000 properties” in the Valley, Link said. “Supply has been trailing behind demand for all of this year and the last half of last year.”

Link said he sees no indication that the supply will increase dramatically this year.

Realtors in the Valley agree they’ve been hampered somewhat by the lack of inventory. But they said there are still deals to be made.

Vitacco said she’s noticed activity pick up markedly in the past few weeks, after an “incredible” March, April and May but a somewhat slower June.

“My cell phone bill had more than 2,000 minutes in April,” said Vitacco. “I judge my business by my cell phone and I’m doing fine.”