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2Q 2003 – DID LOCAL CONDO PRICES REALLY DROP THIS YEAR? The real estate marketing Santa Monica for the first six months of this year shows some interesting changes. Overall sales were typical - total of 462 properties changed hands, compared with 496 for the same period of 2002 and 354 in 2001.According to the Los Angeles Times, condo prices in zip codes 90402 and 90405 have dropped from a year ago. In zip code 90402 – the average home price was up 14.5% to an average of more than $1.4 million. On the other hand, condos in the area saw a 7.1% drop to an average price of $760,000. In zip code 90405, home prices are up an incredible 46.1% from a year ago, for an average selling price of $770,000, but condos have dropped in price by 20.7% to an average price of $329,000. Meantime, homes in 90404 saw a 5.1% rise to an average price of $433,000 and condos rose 12% to an average price of $383,000. Homes located in zip code 90403, have gone up 11.6% to an average selling price of $1.3 million, and condos have gone up 13.6% to $455,000. And, condos in 90401 have gone up 8.1% to an average selling price of $327,000. In the first six months of this year, 78 properties that had a list price of more than a million dollars sold in Santa Monica, up from 67 in 2002, and 40 in 2001. “Sometimes I wonder where these statistics come from, because they don’t jibe with what I’m seeing in the marketplace,” declares real estate agent Mike Beare, a Santa Monica condo specialist. “I’m noticing a steady increase in prices, I don’t notice any signs of prices declining.” What’s so strange about the reported drop in condo prices in certain parts of town, is that according to DataQuick Information Systems, throughout the Southland, April was the fifth strongest month for real estate in the last ten years. And, overall throughout the Southland, real estate prices are up 19% from a year ago. "The statistics are broadly based. Sales counts are strong in every category from entry-level on up to prestige. Appreciation rates are strong across the board also," said Marshall Prentice, DataQuick president. Nationally, average housing prices rose 6.9 percent in 2002, and a total of 38.3 percent from 1997 to 2002, according to statistics from the Office of Federal Housing Enterprise Oversight. In Southern California, prices have risen more than 100% in many neighborhoods – the L.A. Times reports that Glendale zip code 91204 had the largest rise in suburban home prices – 108.5% in the past five years. This rise in real estate prices – and perceived portfolio equity - and the drop in interest rates have raised home ownership rates to record levels. According to Federal Reserve data, at the end of 2002, homes in the United States were worth $13.64 trillion, 92 percent more than a decade ago, while our mortgage debt more than doubled to $6.05 trillion. "What's going on is portfolio adjustment," says Karl Case, a professor of economics at Wellesley College and co-founder of Case Shiller Weiss, the country's premier housing researcher. Despite the reported drop in condo prices, Santa Monica owners should take heart, according to CNN / Money, over the past three decades, national home prices have never declined from one year to the next, though their rate of growth has sometimes lagged that of inflation.
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