Reflecting the area's economic turnaround, the value of assessed property in L.A. County rose 3.1 percent last year - the biggest gain since 1992 - with single-family homes posting an even stronger average increase of 7 percent.
The increase puts total property values in L.A. County above the $500 billion mark for the first time, according to figures to be released this week by county Assessor Kenneth P. Hahn.
"We have definitely turned the corner," Hahn said in an interview last week with the Business Journal.
Driving the increase, Hahn said, has been a sharp escalation in the number of properties assessed at higher values after being sold.
"This is one of the surest signs that the market has been heating up," he said. "I've been looking for this to happen for several years now. It just took longer than all of us expected."
The assessed valuation figures released by Hahn are based on all property transactions, and thus are more comprehensive than the property surveys released by real estate trade groups.
The price of a single-family home in L.A. County averaged $208,400 as of Jan. 1 - up 7 percent from last year's $194,600. Even so, that's still 12.7 percent below the 1991 average price of $238,600.
"We still have a ways to go before property values get all the way back to where they were before the recession," Hahn said.
Indeed, foreclosures last year jumped to 35,437 - the highest level of the decade. But Hahn said the spike is actually another sign of the rebound.
He said the increase was due to banks and other financial institutions taking advantage of the improving real estate market to rid themselves of non-performing loans so that they can get the property hack on the market quickly.
When the market is declining, he said, lenders are often reluctant to foreclose because they don't want to be stuck with properties they cannot sell.
Following the trend of recent years, most of the cities with the highest appreciation in property values were upscale communities like Rolling Hills, La Canada Flintridge and Hidden Hills.
Other communities benefited because of new residential and commercial construction adding to the tax base.
Santa Clarita showed the sharpest increase: 13.2 percent, to $9.1 billion, largely because of new-home sales. El Segundo was next with a 10.5 percent jump, to $5.3 billion, as oil fields were reassessed and the market heated up for commercial and industrial properties.
Palos Verdes Estates saw the third largest gain, at 7.6 percent, thanks to new construction and brisk sales of existing luxury homes.
Only six of LA County's 88 cities - Irwindale. Pico Rivera, Signal Hill. Hawaiian Gardens, Lancaster and Palmdale - saw assessment rolls drop.
In the cases of Irwindale (down 3.4 percent) and Hawaiian Gardens (down 1.l percent). weak industrial markets were to blame. while sluggish sales of moderately priced homes hit areas like the Antelope Valley, Hahn said.
The total assessed property valuation in Los Angeles County was $503 billion as of the official Jan. 1 lien date, up $15.1 billion, or 3.1 percent, from $488 billion as of Jan. 1 last year.
This far outstrips the 0.8 percent increase recorded from 1996 to 1997, although Hahn noted that the 1997 increase was artificially low because it reflected only a 10-month interval. [TABULAR DATA OMITTED] (In 1996, the state Legislature moved the lien date from March 1 to Jan. 1.)
In 1996, property values actually declined by 0.5 percent, and in 1995 the values dropped 2.1 percent from the prior year.
Because of continued strength. Hahn expects that the 1999 figures may show an even bigger rise in property values than those recorded for 1998.
"It's important to remember that these numbers are a snapshot in time, as of Jan. 1," Hahn said. "It doesn't take into account the surge in activity we have seen since then, which should show up on next year's roll."
In the city of L.A., which comprises about 38 percent of the total assessed value of L.A. County, property values rose 2.8 percent, pretty much in line with the countywide increase.
The increases are good news for cash-strapped local governments, which rely heavily on property taxes as a source of revenues. Under 1978's Proposition 13, the property tax levy is 1 percent of total assessed value. The tax is paid directly to the county, which keeps a portion and then passes the rest to the city where the property is located.
About $7.4 billion of the increase in total assessed valuation of property in the county came from reassessments following property sales or transfers.
Another $6.8 billion was due to the annual inflation adjustment of 2 percent. (Under Proposition 13, properties that change hands are reassessed at market value. Those that don't change hands are subject to an automatic annual tax hike of 2 percent or the change in the Consumer Price Index, whichever is less.)
Hahn said this was the first year since 1992 that the increase in reassessments after property transactions exceeded the increase due to inflation.
New construction drove up the assessment roll by an additional $2.5 billion, while purchases of new capital equipment added $3.2 billion to the assessment roll.
The increases were most pronounced on the residential side, which saw a 4 percent jump, to $268.8 billion. Commercial property, which changes hands less frequently, jumped 2.5 percent, to $171.6 billion.
The figures are in keeping with the long-term trend of faster growth in assessed value on the residential side and slower growth on the commercial/industrial side.
When Proposition 13 passed 20 years ago, residential property comprised 44 percent of the assessment roll; the commercial/industrial side was also at around 44 percent. Today, residential property makes up 53 percent of the roll, while commercial/industrial property comprises 34 percent.
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