By Jodi Summers
In some neighborhoods, price increases are huge. In Santa Monica, activity is extremely varied. According to the Los Angeles Times’ statistics, condo prices in zip code 90402 rose 101.6 percent from July 1992 to 1993, with the average selling price for condos in the north of Montana Avenue area at $928,000.
In the single family residence market, new home sales in zip code 90404 by the freeway saw a 65.9 percent rise with an average selling price of $530,000. Oddly, home prices in 90403 — the Wilshire corridor — dropped 9.7 percent to an average selling price of $998,000. Condo prices in Ocean Park remained stable, with a median price of $430,000. Other parts of town averaged a 20 percent gain, give or take a couple of points.
“If a home is priced well, we are still seeing multiple offers and sometimes even over the asking price,” noted Anthony P. Marguleas of A.M. Realty, Inc. “Low interest rates seem to be fueling this hot market. Entry-level homes from $400,000 to $900,000 are still selling very quickly due to the large number of buyers who want to live in Santa Monica. The higher end price range of $1 million and up has been hit harder.”
The high-end properties are still selling, though not as frequently. The most expensive property to sell in Santa Monica in the third quarter of 2003 was a 1913 Italianesque villa north of Montana for $4.6 million. This single family residence was more expensive than the 31-unit apartment building by the freeway, which sold for $3,775,000. The best deal in town was a 558-square-foot condo north of Santa Monica Boulevard, which was “a steal” for $211,000.
In Santa Monica, single family residence sales dropped for the third quarter in 2003. This year, 112 residences were sold between June and September, down from 131 the same time last year. Condo sales were up, with 234 for the third quarter of 2003, compared to 208 for the third quarter of 2002.
Income properties saw a slight drop to 24 this quarter, as compared with 27 last year. Four pieces of land changed hands and three changed hands last year.
All in all, home sales in Southern California reached their highest level in 15 years this summer. According to DataQuick Information Systems, in July, a total of 33,561 houses and condos were sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties — up 9.6 percent from July of 1992. In LA County, 11,926 residences were sold for an average price of $328,000 — up 23.3 percent from July 2002. “People are taking more risks with their money because they see the gain in property value,” said one real estate veteran. “When the interest rates are that low and the gains are so high people want to get in the game. Plus, lenders are lending money freely. You can get 100 percent financing. Forty years ago, you could only get 60 percent financing and at much higher interest rates.”
The median price that Southland buyers paid for a home rose to a new high at $328,000 in July, up 20.6 percent from July last year. If you play with the numbers, those $300,000 one-bedroom units around town start to look like a deal.
Want to talk dollars? According to DataQuick, the typical monthly mortgage payment that Southland buyers committed to was $1,442, up from $1,281 a year ago. The all-time peak was in May of 1989 at $1,453.
And all that talk of property prices being in a bubble, well, Eric Belsky, executive director of the Joint Center for Housing Studies at Harvard University, observes that the best way to gauge the housing market is in relation to income growth.
“It is unusual to see rapid price declines unless there is substantial job loss and that kind of job loss did not take place over the 2001 recession and it is unlikely to take place,” Belsky noted.
Indicators of market distress are still largely absent. Foreclosure rates are low, flipping rates are low, adjustable-rate mortgage usage is low, down payment sizes are stable and there have been no significant social or economic shifts, so for the moment, the real estate market remains status quo. (If you would like to more information of interest to property owners, , or call at (310) 309-4219).
Originally published in the Santa Monica Daily Press print edition on September 10, 2003. Read the original PDF.