Today’s papers bring some interesting articles on the Los Angeles economic market.
First, the Daily News and the Los Angeles Times are reporting that Southern Californians bought houses in record numbers during June despite prices hitting all-time highs in each of the region’s six counties. According to La Jolla-based DataQuick Information Systems, a total of 35,454 new and previously owned houses and condominiums sold from Ventura to San Diego counties, 2.1% more than a year earlier and an increase of 14.8% from May. During June, the region’s median price gained an annual 14.5%, to a record $465,000, but annual increases continued softening. I have to admit that our new house was one of those statistics.
In the sprawling Los Angeles County market, the median price — the point at which half the homes cost more and half less — jumped 14.7%, to $475,000, while sales increased an annual 2.8%, to 11,673 transactions. Ventura County’s median price jumped 16.8%, to $584,000, and sales increased 16.4%, to 1,707 transactions. Orange County became the region’s first county to post a median price topping $600,000. San Bernardino and Riverside counties continued to show the biggest percentage price gains. In June, the median price in San Bernardino rose 30.9% to $322,000, and in Riverside it was up 23.2% to $393,000.
DataQuick said the typical monthly mortgage payment that buyers committed themselves to last month was $2,021, down from $2,028 for the previous month but up from $1,928 for June a year ago. Foreclosure activity has bottomed out, but is still low. Down-payment sizes are stable, as are flipping rates and non-owner-occupied buying activity.
There are signs of slowing. The region’s 14.5% year-over-year rise in the median price was the smallest gain since March 2002. And San Diego County, once among the region’s hottest markets, continued to show signs of slowing dramatically. The prediction appears to be that home price increases over the next six to 12 months would continue to appreciate at a “more normal” pace — and could even slip into negative territory — but won’t crash overnight. Such a scenario could be unfolding in San Diego County, where sales declined 8.8% in June while median prices rose 6.3% to $493,000. That was the second consecutive month of price gains below 10% and the slowest rate of appreciation of all Southland counties.
So why haven’t we seen the “pop”? This is made clear in two other articles from the Times and Daily News. The Los Angeles County Economic Development Corp.’s midyear forecast expects the county as a whole to show annual job growth of 1% this year while all parts of the Valley region — including the Santa Clarita and Antelope valleys — will do better than that. Forecasters expect the Santa Clarita area to see job growth of about 6%. The East Valley, which includes Burbank and Glendale, the West Valley and the Antelope Valley will be among the county’s top performers with a growth rate near the 3% range. The key concerns are (natch’) a lack of affordable housing, limited by overly burdensome regulations and NIMBYism, and traffic congestion.
The report noted that two of the region’s signature sectors — movie/TV production and international trade — face tougher outlooks although they should continue to add jobs. Technology jobs are rebounding, while the region’s bio-medical industry is expected to benefit from increased stem cell research. Within the business and professional services category, accountants and lawyers are expected to gain work from increased corporate financial reporting requirements, while architects probably will see more activity with a pickup in office building development. Riverside-San Bernardino is expected to continue to post the Southland’s strongest job growth rates, with estimated 3% gains for this year and 2006, the business organization predicted. Orange County would follow, with estimated job growth rates of 1.9% in 2005 and 1.8% in 2006. Los Angeles County is expected to post job gains of 1% this year and 1.1% next year, the group said. Of the 41,600 new jobs in the region’s biggest county, an estimated 11,500 would be produced by the construction sector.Three subregions stand out as “overachievers”: East San Fernando Valley, San Gabriel Valley and West Los Angeles. Two subregions, however, stand out as needing more support: the southeast area and South Los Angeles.
Yet again, I think, LA is the place to be.
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