Housing market getting healthier

This story appeared in the Antelope Valley Press May 6, 2001.

By ANN WISHART
Valley Press Business Editor

PALMDALE - With demand for affordable houses becoming more insistent throughout Southern California, builders in the Antelope Valley are opening new tracts to supply hopeful home hunters.

Beazer Homes and Rancho Vista Development Company are on the verge of more home construction. Roy Migita, vice president of Rancho Vista Development, said the infrastructure is being put in place for 83 home sites in west Palmdale on the south side of Rancho Vista Boulevard east of the Skyline I project. The first tract sold out last year. Construction of homes in Skyline II will begin in June, he said.

Beazer Homes is negotiating for property south of Rancho Vista Boulevard and around Rancho Vista Golf Course. If the deal is concluded in the next month, construction on a tract with 175 home sites will begin in February, said Clarence Clemons, Beazer Homes' vice president of sales.

"Sales have been going extremely well for Beazer in the Antelope Valley," Clemons said. So far this year, the Country Club Vista tract has been selling about six homes a month, and Rancho Vista averages sales of seven homes a month, he said. April saw the two tracts net 16 sales.

Prices for Beazer homes have been going up, staying slightly under the cost of comparable older homes, he said. When the Rancho Vista tract opened in January 1999, the base price for a home was $145,000. Now the base price is $173,000, he said.

Beazer is getting ready to release the final phase of its Rancho Vista tract at Rancho Vista Boulevard and Homeridge, Clemons said. Prices there range from $173,000 to $210,000, and prices at the Country Club Vista tract, at 35th Street West and Town Center Drive, range from $216,000 to $244,000, he said.

House prices usually increase during the building life of a tract, said Gretchen Gutierrez, executive director of the Valley chapter of the Building Industry Association. Price increases of new homes in the Valley have been moderate compared to 10 years ago when prices would jump $20,000 in a week, she said. Builders are aware of the dangers of inflated prices and want to keep the housing market in the Valley stable, she added.

Recent permit information from the county shows that the number of permits issued for new residential construction is up. In the first quarter of 2000, 78 permits were issued for single-family dwellings in Palmdale; 52 were issued for Lancaster. In the first quarter of 2001, 163 permits were issued for Palmdale and 71 for Lancaster, showing increases of 109% and 36.5%, respectively.

Median prices and numbers of resale homes in the Antelope Valley continue to make some dramatic leaps according to figures provided by the California Association of Realtors.

The median price of a home shot up 22.5% in Lancaster and 26.6% in Palmdale in March 2001 compared to March 2000, according to CAR. The median resale price for a home in Lancaster rose from $89,000 last year to $109,000, while it grew from $98,750 to $125,000 in Palmdale.

That means the increase in the median resale price for homes in the Valley is nearly double that of the rest of the state, which rose 12.8% in the same period. CAR President Gary Thomas said the median price of a home posted an increase in every region of the state, with many areas appreciating 10% and higher.

Statewide, the median price of a home was $262,980 in March 2001, up from $233,140 in March 2000, according to CAR. A median price is defined as the price at which half the homes for sale cost more and half cost less than the median figure.

Despite higher prices, homes are selling faster across the state than a year ago. The average sale closed in 26 days this year compared to 32 days in 2000. It would have taken three months to sell every home on the market in March 2000, whereas in March a year ago, it would have taken 3.6 months.

"The demand for housing continues to outpace the supply of homes for sale" despite consumers' concerns about the economy, said Leslie Appleton-Young, CAR vice president and chief economist. Sales of existing, single-family homes rose 6.6% in March over February, she said.

Real estate professionals in the Valley are relieved to see the market improving and rising but are still cognizant that it could do the same "boom to bust" that it did in the early 1990s if prices become inflated. Real estate values in the Valley have been depressed until recently because of the numerous HUD houses on the market following the market slump in the early 1990s, according to Bruce Hailstone, realtor and former president of the Greater Antelope Valley Association of Realtors.

When the Valley suffered from cuts in aerospace in the early 1990s, many residents who had bought homes at inflated prices, then lost their jobs, were unable to make payments and abandoned their homes to the lenders, Hailstone said. Those homes, with government-subsidized, artificially low prices, drove down the value of most homes in the Valley. Now that most HUD homes have been sold, the statistics show the value of homes increasing dramatically, whereas they are actually just beginning to be valued realistically, he said.

CAR figures show 333 Valley homes were resold in March 2001, said Pamela Westall, CEO of GAVAR. That figure is a reflection of the multiple listing service used by most real estate offices, she said, and does not include homes sold without benefit of a real estate agent.

Of those homes that were resold, 193 fell in a price range between $100,000 and $250,000, she said.

Not only are homes in the Valley more affordable than in most other regions of the state, but dropping interest rates and changes in lending policies are giving buyers incentive to take out mortgages, said Dana Haycock, president of GAVAR. Buyers can get a $250,000 mortgage with as little a 3% down if they can afford the monthly payments, she said.

"$250,000 still buys quite a bit of house anywhere in the Valley," Haycock said. Even land is beginning to sell again, a good sign people are willing to invest in real estate. Other regions may be experiencing a sluggish economy, but the slowdown is not apparent in the Valley real estate market.

"I'm very optimistic about what's going to happen over the next several years," Haycock said. "Things are going really well and will continue to go well. Affordability is the key to our growth."