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Through the roof in 2003

Low interest rates and demand drove the market to milestones in sales, prices and refinancing.

January 25, 2004|Diane Wedner | Times Staff Writer

In what is being touted as the best year ever for housing, Southern California home price, sales and refinancing records were shattered in 2003, the result of low interest rates and the relentless demand for homes.

Additional factors, such as a lackluster stock market and a local economy that outperformed most economists' predictions, propelled even the most reluctant buyers into homeownership. The result was a win-win situation for homeowners and the economy, which greatly benefited from the year's record refinancings.

"2003 defied all expectations," said Leslie Appleton-Young, chief economist for the California Assn. of Realtors. "No one anticipated that rates would stay low for so long and continue in that vein."

Rates that fell nationwide to 4.92% in early June -- for the first time in decades -- and averaged 5.44% for the year gave mortgage bankers a record $3.4 trillion in total loan volume, $2.3 trillion of which was refinancings, said Doug Duncan, chief economist for the Mortgage Bankers Assn. Homeowners, who saw record gains in their home equity last year, pulled billions out of that wealth and fed it back into the U.S. economy, helping it avoid a slip back into recession.

For The Record
Los Angeles Times Tuesday January 27, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 53 words Type of Material: Correction
Home appreciation -- A chart showing the top appreciating communities in Los Angeles and Orange counties for 2003 in Sunday's Real Estate section omitted Los Angeles ZIP Code 90006. It ranked seventh, with a 31.1% price increase over 2002 sales of single-family homes for communities where 50 or more homes sold in 2003.
For The Record
Los Angeles Times Sunday February 01, 2004 Home Edition Real Estate Part K Page 7 Features Desk 4 inches; 55 words Type of Material: Correction
Home appreciation -- A chart showing the top appreciating communities in Los Angeles and Orange counties for 2003 in the Jan. 25 Real Estate section omitted Los Angeles ZIP Code 90006. It ranked seventh, with a 31.1% price increase over 2002 sales of single-family homes for communities where 50 or more homes sold in 2003.
For The Record
Los Angeles Times Sunday February 01, 2004 Home Edition Main News Part A Page 2 National Desk 1 inches; 55 words Type of Material: Correction
Home appreciation -- A chart showing the top appreciating communities in Los Angeles and Orange counties for 2003 in the Jan. 25 Real Estate section omitted Los Angeles ZIP Code 90006. It ranked seventh, with a 31.1% price increase over 2002 sales of single-family homes for communities where 50 or more homes sold in 2003.

Contributing to last year's record-setting market was pent-up demand for housing since the mid-'90s, which spurred buying in the Inland Empire and Los Angeles County, and demand for homes generated by those moving to the region and from job creation.

Those demands boosted the Southland's median home price to a record $326,000, up 19.3% from 2002, according to DataQuick Information Systems, a La Jolla-based research firm.

Riverside County prices saw the steepest gain, 25.9%, to $238,000, followed by San Bernardino County, which rose 21.2%, to $183,000. Los Angeles County rose 20.9%, to $330,000; Ventura County, 18.9%, to $402,000; Orange County, 18.4%, to $450,000; and San Diego County, 18.3%, to $395,000.

Riverside leads trend

A record 359,851 homes and condos were sold in 2003 in the six counties. That marked the strongest sales count for the region since 339,962 were sold in 1989. A record 57,432 newly built homes were sold, the most since 64,446 were sold in 1988.

Riverside County posted the greatest increase in overall sales, at 8.6%, followed by San Diego County, at 6.7%. San Bernardino County saw a gain of 4%; Orange County, 3.3%; and Los Angeles County, 3.1%. Sales in Ventura County were down 0.5%, largely due to a shortage of homes on the market.

Homeowners who stayed put didn't do badly: The average Southern California home increased in value by $54,174 in 2003, "earning" homeowners $4,514 each month.

First-time buyers, who made up about 30% of the market, took advantage of favorable mortgage interest rates and second loans to purchase homes, Appleton-Young said. "They're doing whatever they can do to get in."

Norwalk resident Alonzo Enriquez, 28, was among many first-time buyers who benefited from waiting -- in his case four years -- for mortgage interest rates to drop. Unable to afford a down payment and comfortable monthly payments until now, the Los Angeles County social services worker is in escrow on a 900-square-foot two-bedroom home in Norwalk.

Enriquez paid $255,000, which was $10,000 above the asking price, in a multi-offer bid for the house. He put 10% down and is getting a second mortgage.

"The rates had to be at 5% for me to get in," Enriquez said. "Then I had to look at 10 homes before I found this one. It's very competitive out there in this range."

Norwalk had only 50 active listings two weeks ago, said Paul Britton, a Prudential California Realty agent. Britton said that the area, in more normal times, has an inventory of 300 homes available. Nearby Cerritos had only 18 listings that same week, with only one home listed for less than $400,000.

"Buyers want to get in now; they don't want to wait for prices to fall," Britton said. "Sellers don't feel that prices are peaking yet, so many want to sit and watch. Besides, they often can't move up, even if they want to. There aren't many homes available."

Condos and townhomes provided an entry point for many Orange County buyers last year, said Mike Cocos, manager of ERA North Orange County Real Estate in Yorba Linda. Condos started at $285,000, compared with about $350,000 for a single-family residence. By 2005, however, condos are expected to start at $400,000 in north Orange County.

"Entry-level buyers today know they have to be serious and make a full-price offer in areas like Yorba Linda, Placentia, Fullerton and Anaheim Hills," Cocos said. "There are multiple offers on homes all over, except the very high end."

A boom at the top

There were no slumping sales of million-dollar-plus homes in Beverly Hills, where one office, Coldwell Banker, closed 424 $1-million-plus deals last year, up from 326 homes a year ago, said Betty Graham, the manager there. In 2003, Graham's office sold 22 homes priced higher than $5 million, up from 13 homes in that range a year ago.

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