House Prices Roar Back to Life on Westside

Bob Blinick and Judy Parks explored the idea of selling their Santa Monica house in 1995 but discovered an anemic real estate market and depressed property values. They decided to stay put.

This summer, however, Blinick and Parks found a far different market when they put their four-bedroom home up for sale at $599,000. The house sold within five days at $21,000 more than the asking price, after a bidding battle in which several rival buyers submitted all-cash proposals.

“It was way faster than we had anticipated,” said Blinick, 52, who along with Parks has moved to the East Coast. “We were very, very happy.”

There are many other happy home sellers in Santa Monica and across the Westside of Los Angeles, where large numbers of well-heeled, determined buyers have sent prices soaring in some of the area’s most affluent neighborhoods.

While residential real estate across most of Southern California has been slowly emerging from a deep slump, property values in many of the Westside’s upscale communities have roared back to life in the last 12 months. A few homeowners have seen their property values soar by more than $100,000.

Median home prices--excluding condominiums--in the Ocean Park section of Santa Monica jumped nearly 25% in the third quarter of this year, to $404,500, compared to the same period in 1996, according to Acxiom/DataQuick, a real estate research firm. Prices are about 11% higher in West Hollywood and nearly 21% higher in Malibu. (By contrast, the median sales price for a single-family home in Southern California is $173,000--5.5% above where it was this time last year.)

“The entire market is being fueled by the high end,” said Linda Berg, general manager of Coldwell Banker Jon Douglas’ Southern California operations. “That’s where the demand has been.”

The soaring values on the Westside are being fueled largely by the robust expansion in the entertainment and multimedia industries. Once-vacant office space in Century City and Westwood is again filling up with high-paid lawyers, accountants and investment bankers who want nearby places to live.

The soaring prices have echoed like a sonic boom through Santa Monica, which has attracted swarms of well-heeled buyers because of its attractive neighborhoods, well-regarded school district and proximity to the beach.

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Prices are also rising because the supply of homes for sale is down markedly from last year, in part because of higher sales and because few new homes are being built in the fully developed high-income neighborhoods.

The frenzied price surge is somewhat reminiscent of the early stages of the housing booms in Southern California in the 1970s and 1980s, when annual double-digit price rise percentages in residential real estate became the norm.

The price increases also mean that home values in some choice neighborhoods have recaptured a good chunk of the value lost earlier in the decade. Homes in some Westside areas had their values drop as much as 50% in the real estate crash of the early 1990s.

Though a regionwide return to the ‘70s and ‘80s is unlikely, what is happening on the Westside is a dramatic example of buyer demand for move-up properties in Southern California, where residents are growing increasingly confident about the economic outlook and their personal prospects, real estate expert say.

The buying activity has stunned even the most experienced Westside real estate agents, long accustomed to the area’s lofty prices and snob appeal. Some properties have attracted bids of $100,000 more than the asking price, and a few sellers have demanded offers before they even let potential buyers take a look inside.

Builders are buying old houses in the north end of Santa Monica for more than $600,000, only to demolish them and construct $2-million mini-mansions.

Not even this week’s financial convulsions on Wall Street were enough to cool down the housing market.

When the owners of a small, two-bedroom house in Pacific Palisades started accepting offers Tuesday, more than two dozen eager buyers plunged into the bidding war despite a $425,000 asking price, according to agent Michael Edlen. The winning bidder came in with an offer of $100,000 more than the asking price.

“We were there at 11 a.m., and there were already 18 offers,” said real estate agent Ron Burns, whose client dropped out of the running when he saw the competition. “When the frenzy hits a [small] house like this, it means that everybody is jumping in.”

Gone are the days when agents would spend months escorting picky buyers through countless homes. Now buyers are advised to get pre-approved for home loans and to be ready to look at a house and submit an offer within hours of its hitting the market.

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“You are not going to have your clients in your car for six months [looking for homes],” said Fred Sands agent Sigita Blum. “They can’t afford the luxury of thinking about it overnight.”

In a common tactic to spark interest, the owners of a $749,000 home in Santa Monica’s Ocean Park section put their house on the market for several days before potential buyers were allowed to view it and then waited a few days longer before accepting offers. The bidding started on Wednesday and the house sold on Friday after multiple offers far above the asking price, according to real estate agent Tony Yollin of the Remax company.

“It turned out to be a great marketing technique,” Yollin said. “It created an urgency to be the first one to see it and the first one to get it.”

That kind of pressure finds many desperate home buyers jumping on any available property. Health care consultant Paul Katz had grown weary of house hunting in the pricey neighborhoods north of Montana Avenue in Santa Monica. He spent weeks making offers only to be topped by rival bidders.

So when he and his wife, Susan, spotted a new house for sale one Sunday, he wasted no time setting up an appointment to view the property the next day. He immediately made an all-cash bid in the low $600,000 range that was accepted a few hours later. Before dawn, Katz signed documents to open escrow before heading off on a business trip.

“It was an ugly house,” said Katz, whose family has added a second-floor to the home on 14th Street. “But it’s the location I wanted. We feel very fortunate and lucky to have what we have.”

The neighborhood around Montana, where locals can buy a $3 latte or a $900 evening gown, has become ground zero for young home buyers, many employed in the entertainment industry.

John Hathorn, a real estate agent with Coldwell Banker Jon Douglas, has seen homes in the neighborhood that once would have sold for $650,000 fetch $950,000. “It’s been incredible,” said Hathorn, who has been selling homes north of Montana for the past decade. “Almost all the losses of the early ‘90s have been regained.”

On quiet streets lined with swaying palm trees and Range Rovers, construction workers dump debris into huge trash bins as new buyers expand and remodel their property and builders demolish old homes to make way for flashy, 5,000-square-foot residences. The new homes feature multimedia entertainment rooms and $125,000 kitchens with fireplaces.

“It’s a very popular area . . . and people are willing to pay for it,” said home builder Paul Morrow, who plans to sell new homes north of Montana for about $2 million.

The upward spiral in values is, of course, great comfort to those who purchased their homes before the market surged.

Since Gery LeGagnoux, a 46-year-old therapist, bought his house north of Montana last year, the house across the street has sold for nearly $1 million.

“We slipped right in last September,” said LeGagnoux, who estimates that his house has jumped at least $100,000--or nearly 15%--in value. “If we had waited, we would not have been able to move in.”

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In Pacific Palisade...

* 2 bedrooms, 1.75 baths.

* Corner lot near ocean bluffs.

* Some hardwood floors.

* Asking price: $425,000

* SOLD $525,000

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Westside Prices

Home values in many affluent communities on the Westside of Los Angeles have jumped over the last year as the economy has improved and consumer confidence has risen

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Community Median Sales Price* 3rd quarter 1997 Westwood Village $642,500 West Hollywood $582,500 Bel-Air Estates $794,500 Malibu $700,000 Santa Monica (90405 ZIP Code) $404,500 Southern California $173,000

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% change from 1996

Westwood Village

West Hollywood

Bel-Air Estates

Malibu

Santa Monica

Southern California

Source: Acxion/DataQuick; researched by JESUS SANCHEZ / Los Angeles Times