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Frenzy Amid Skyrocketing Westside Prices : Buying a House in Boom Town an Ordeal

March 23, 1989|KENNETH J. GARCIA | Times Staff Writer

Each year, the traffic gets more congested. New commercial construction blots out residential views. Developers and environmentalists battle for every remaining piece of open space. Parking becomes increasingly scarce. Homeowner groups raise their voices in protest.

And real estate prices in the Westside continue to soar to new heights.

Forget the complaints about the crumbling quality of life on the Westside. Hordes of affluent home buyers are lining up, sometimes with millions in cash, to grab a chunk of land as close as they can to the Pacific Ocean.

Outpacing the U.S.

The prices are staggering. Middle- and upper-income families are being frozen out of the modest Westside neighborhoods. Former blue-collar communities are becoming havens for starch-collared corporate executives. And in a city as celebrity-conscious as Los Angeles, real estate agents are becoming stars, sought after by the rich and famous.

Economists predict that real estate prices in the section of Los Angeles County bordered on the north by the Santa Monica Mountains, on the south by Los Angeles International Airport and on the east by Western Avenue, will continue to outpace all but a few communities in the United States during the next few years.

The average sale price of single-family homes jumped more than $100,000 in at least 10 Westside areas over the past year, according to sales reported through multiple listing services. The average sale price in several other communities jumped more than $200,000.

In the sharpest increase reported, the average sale price of a single-family home in Playa del Rey rose 63% in 1988, leaping to a new high of $603,000. And that's with airport noise. The listing prices were even higher.

And the homes for sale on the Westside were on the market only half as long as they were a year ago.

Although the real estate boom engulfed numerous areas of the Southland, particularly such hot spots as Pasadena, Glendale, and the West San Fernando Valley, the surge pumped up the already-steep prices in numerous Westside communities.

The average sale price of single-family homes in Beverly Hills and Bel-Air already top the $1 million mark. Next year, Brentwood probably will join that list. Malibu and Pacific Palisades are only a few years away.

Why the house-buying frenzy? What is driving up the asking and selling prices of Westside bungalows to mansion levels?

Industry experts say it's a simple imbalance between supply and demand. Available Westside land is almost used up, and with a booming regional economy luring people from around the country to Los Angeles, more and more people are lining up to try to buy the best properties.

"I think the only thing that would make the escalation stop would be if the financial services community doesn't make as much money available to home buyers," said Michael Salkin, an economist and senior vice president at First Interstate Bank. "But I don't think the trend will reverse until the state of California no longer attracts households for economic reasons."

Little New Housing

Although population growth on the Westside has lagged behind the rest of Los Angeles County--rising only 8% since 1980, compared with 12% countywide--the fixed housing supply has dramatically lifted sale prices.

"It's the same phenomenon that occurs in San Francisco, where even if the population rises only slightly, there is still very little new housing being built," said Salkin.

"Prices won't stop increasing until the population drops or the economic strength shifts to other parts of the country.

"The fundamental fact is that you've got a lot more people chasing houses than there are houses available."

In the past 12 months, while the demand for housing surged throughout Southern California, the Westside was targeted by a huge influx of home buyers. Industry analysts say that the already limited inventory of housing previously has been sold in only three months. In the last few years, it would have taken eight to 12 months to exhaust the supply of single-family homes.

"The price pressures on the Westside are reflective of much of coastal California," said Joel Singer, chief economist for the California Assn. of Realtors. "You will continue to have rising prices on the Westside because of the scarcity of land. As the job market on the Westside continues to grow, it will promote a further demand for housing, but it's not going to generate new housing."

The result will be a continuing trend of what real estate agents call multiple bid offers, where groups of prospective buyers try to outspend each other for newly listed properties. Singer and other economists say they haven't seen anything like it since a similar housing boom in the late '70s.

Few New Homes

Ben Bartolotto, director of the Construction Industry Research Board, said the small supply of new homes on the Westside will continue to drive existing home prices up.

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