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Thursday, Mar 28, 2024

REAL ESTATE—Big Jump in Valley’s Real Estate Values

The total assessed value of real estate in L.A. County rose by 6.7 percent last year, according to a report from the county Assessor’s Office, and many of the fastest-growing communities in terms of property values are in the San Fernando Valley. The newly compiled figures show that local real estate values have finally recovered all of the ground lost in the recession and surpassed their 1991 peak. Hidden Hills and Santa Clarita showed the most significant increase in assessed values among Valley area communities, registering jumps of 10.5 percent and 9.0 percent, respectively. Burbank (8.2 percent) Calabasas (8.0 percent), and Westlake Village (7.6 percent) also surpassed the overall county figure. “Most of the increase in these communities is attributable to changes of ownership, new construction and restored valuations,” said Gilbert Parisi, special assistant to County Assessor Rick Auerbach. Auerbach’s report shows that the average market value of single-family homes in L.A. County that changed hands last year rose 7.1 percent to $245,000, surpassing the 1991 peak value of $238,000. The total assessed value of commercial, industrial and residential properties in L.A. County rose last year by $36 billion to a record $569 billion. That outpaces the 6 percent growth in total assessed valuation in 1998. “We have a strong economy, with high consumer confidence and low unemployment,” Auerbach said. “Real estate is one of the key factors in this economic growth.” This is welcome news for local government coffers, which have only recently recovered from the devastating property value declines of the early 1990s. (Under Proposition 13, annual property tax payments to local governments are equal to 1 percent of a property’s total assessed valuation.) What’s more, Auerbach said he expects this upward trend to continue through the rest of this year. “I expect next year’s assessment roll to show a very similar increase in the 6 percent to 7 percent range,” he said. “We’re not seeing any letup in property transfers, and the overall economy remains in good shape.” In Burbank, valuations rose from $9.5 billion in 1999 to $10.2 billion this year. Almost a third of the increase (31 percent) was from increased values on properties that were sold. In Burbank, sales transactions were mostly in the commercial arena, with some industrial and residential. The city’s office vacancy rate remains virtually unchanged from last year, hovering around 7.3 percent, according to Grubb & Ellis Co. Monthly asking rents are holding steady, too, averaging around $2.80 per square foot. High-end home sales In the upscale residential community of Hidden Hills, most of the increase came about because of changes in ownership, with homeowners selling their properties for considerably more than they had paid. The aggregate assessed valuation in the community moved from $533 million in 1998 to $589 million in 1999. “Everywhere in Los Angeles there’s a shortage of land,” notes Jack Kyser, chief economist with the L.A. County Economic Development Corp. “So if you have a well-located parcel with something valuable on it, you’re going to experience higher valuations that ever before.” The upturn in property values across the Valley is based on a number of economic factors, such as low unemployment, low residential and commercial vacancy rates and high consumer confidence, Kyser said. “The increased property values are a reflection of the Valley’s economic recovery from the downsizing of the defense industry and the 1994 earthquake,” he said. “There’s a heck of a lot going on over there.” The west and north Valley are experiencing new growth from the advanced technologies industries. The east Valley is faring well, too, Kyser said, “despite the uproar surrounding runaway production.” Commercial growth, particularly in the form of office and retail space, is the primary driver. Of course, the upturn isn’t floating all boats equally. A few Valley communities are seeing assessed valuation growth rates below the county average, though not by much. Agoura Hills posted a gain of 5.6 percent, Glendale 5.8 percent and San Fernando 6.1 percent. Less impressive are the Antelope Valley communities of Palmdale and Lancaster. Though real estate speculators continue to insist that L.A. County’s future growth spurt will take place to the north, so far these areas are not enjoying the resurgence that is being experienced by the rest of the county. Palmdale’s property values rose by 3.9 percent, while Lancaster’s were up 4.1 percent. Meanwhile, San Gabriel Valley cities like Covina and South El Monte posted gains in the 2 percent range. “The demand simply hasn’t been there in these areas,” Auerbach said. “In fact, many of these cities still remain below their pre-recession peaks for total assessed valuation.” But, for the first time in nearly 10 years, not a single city in L.A. County saw its total assessed property values decline. In fact, only three cities posted gains of less than 2 percent: Cudahy (1.1 percent), Covina (1.6 percent), and Artesia (1.9 percent) About $15 billion of the $36 billion increase in property values came from reassessments triggered by ownership changes. Under Proposition 13, property assessments are limited to 2 percent growth per year, unless a property changes hands. Then it is reassessed at the current market value. Another major factor in the overall increase was the restoration of original assessed values of homes under Proposition 8. That measure allows residents to appeal to have their assessments lowered when market conditions are soft; however, the assessments are restored once the market firms up again. Last year, $9 billion was added to the assessment rolls from value restorations on about 320,000 parcels. The standard 2 percent hikes mandated by Proposition 13 accounted for $8 billion of the increase, while new construction contributed another $4 billion to the countywide assessment roll. “For the last three years we’ve been aggressively and proactively reducing property values because of changes in the market,” Parisi said. “Now that things are turning around, we’re going back and bringing them in line with current market conditions.”

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