Fueled by a diverse and booming Southern California economy over the last half-decade, homes in much of the Southland have regained or exceeded their pre-recession values, real estate analysts say.
Median home prices in such cities as Palm Springs, Pasadena, South Pasadena, Westlake Village, Manhattan Beach and much of Orange County have seen gains of up to 55% in prices over the last real estate peak in the early 1990s, according to DataQuick Information Systems Inc., a La Jolla-based research firm.
FOR THE RECORD
Los Angeles Times Tuesday September 11, 2001 Home Edition Part A Part A Page 2 Zones Desk 1 inches; 27 words Type of Material: Correction
Map--The names of Riverside and San Bernardino counties were transposed in a map on the cover of the Sept. 9 Real Estate Section. Also, Route 60 east of Riverside was mislabeled as Interstate 10.
For the Record
Los Angeles Times Sunday September 16, 2001 Home Edition Real Estate Part K Page 2 Real Estate Desk 1 inches; 26 words Type of Material: Correction
Map--The names of Riverside and San Bernardino counties were transposed in a K1 map in the Real Estate Section on Sept. 9. Also, Route 60 east of Riverside was mislabeled as Interstate 10.
On the flip side, however, home values in such Inland Empire cities as Joshua Tree, Hesperia, Lake Elsinore and Blythe, and the north Los Angeles County communities of Palmdale and Lancaster still lag--up to 40%--as homeowners struggle to bounce back from the overbuilding, steep job losses and accompanying foreclosures that hit those areas particularly hard in the mid-1990s.
Since the last peak about a decade ago, 309 of the 415 Southland ZIP Codes where a significant number of homes sold saw increases in median home values, according to DataQuick figures. Real estate values in three ZIP Codes have matched their pre-recession values, while those in 103 ZIP Codes have not yet achieved their pre-recession levels.
Los Angeles County, which was hit much harder by the recession than other areas in the state, saw steeper drops in home values--up to 40% in some neighborhoods--than any other Southland county. The city's core saw little home-buying activity during and after the recession, experts say, and still lags in some depressed spots.
Areas hard hit by the recession have recently seen a surge in home buying activity, however, as Palmdale and Lancaster and some Inland Empire cities have evolved into vibrant communities where jobs are closer to home, said John Karevoll, an analyst with DataQuick.
"Many people who live in the outlying areas also work there," Karevoll said. "Those cities are no longer just mopping up the spillover from the other side of the mountain, as they did in the last boom. Home buyers are choosing those cities for the prices and lifestyle."
Modest homes in lower-priced neighborhoods of Los Angeles County, such as El Monte, Gardena and South-Central L.A., also have recently seen a surge in residential real estate values, increasing 17% or more.
Still, prices in neighborhoods that were late coming to the recovery lag significantly behind San Clemente in Orange County, for example, where prices are up 30% over a decade ago.
The median price for a home in parts of Manhattan Beach early in the '90s was $548,000, slid to $439,000 at the lowest point of the recession, but has bounced back 41.4% over the last peak to $775,000 today.
Compare that to one Palmdale neighborhood, however, where the pre-recession high of a median home was $129,000, then sunk to a recession low of $54,000, and today is still down by nearly 37%, at $81,500.
"The recession snuck up on us--it was like coming up on a pedestrian in a crosswalk," said Mike Teer, a broker at Teer One Properties in Riverside. "Even during the upswing the values were held back. It took a long time to bounce back, but we're playing catch-up now."
It can't happen soon enough for Sonia Pierce, 41, and Jeff Smith, 40, who bought their Moreno Valley home in Riverside County at the peak of the last buying boom in October 1992.
The married couple, who bought the four-bedroom home for $160,000, watched in dismay when, one month after they closed escrow, two houses on their block went up for sale, fetching prices far below what they had just paid.
Then, a week later, the bank foreclosed on a neighbor's house, and the pair knew they were in trouble.
"We didn't have much equity in the house, and we quickly found ourselves upside-down," Pierce said. "We decided we had to ride [the recession] out, no matter what. We won't do a thing until we've regained our equity."
The couple's home, at the depth of the recession, had lost 36% of its value, appraising at $120,000. Today, the home is worth about $135,000, Pierce said.
Real estate experts attribute the steep decline in Inland Empire and north Los Angeles County real estate values in part to the military base closures and massive aerospace layoffs around the Southland when the Cold War ended in 1989.
Layoffs and the fall in home values doubled the number of homes repossessed by banks.
Foreclosures for the six-county Southern California region rose 107% from 1991 to 1992, and hit a peak in 1997, when 57,998 homes foreclosed in the region, according to Alfred J. Gobar, a real estate economist.
Furthermore, builders in the late '80s constructed more homes than they could sell.
When the recession hit, this stockpile of unsold homes helped to depress prices, especially in Palmdale and Lancaster, where newly built homes had 30% drops in value.
