Sweet equity: rising home values have vaulted some beach communities into the ranks of L.A.'s elite, fattening the pockets of residents.

IT'S long been accepted as gospel. In Los Angeles, you don't have to be a rocket scientist to become wealthy. All you have to do is buy a home.

Home prices have shot up over the past decade, nearly tripling in a few ZIP codes and adding hundreds of thousands of dollars to homeowners' personal balance sheets.

Just about anywhere will do--but get close to the water and it's a veritable bonanza. Neighborhoods in Santa Monica and Manhattan Beach that were merely desirable a decade ago are now among the county's elite.

"In the four years since we bought this house, it has earned more money than we have," said Kathleen Micham, a homeowner in Santa Monica's 90405 ZIP code, where the median home price rang in at $733,000 in 2003.

And that rocket scientist?

Back in 1993, the median home price in the leafy hills near Pasadena's Jet Propulsion Laboratory--the 91101 ZIP code of La Canada/Flintridge--was $440,000, $100,000 higher than prices in 90405, the swath of Santa Monica tract homes running along Ocean Park Boulevard. Both have gone up, but Santa Monica has gone up faster. The price difference between the two ZIP codes was only $40,000 in 2003, according to DataQuick Information Systems, which tracks home sales.

Rising home values have rearranged the pecking order of the city's wealthiest ZIP codes. They're why Santa Monica's 90402, north of Montana Avenue, ranks No. 5 among L.A.'s wealthiest neighborhoods, while San Marino's 91108, with some of the deepest, oldest pockets of household net worth in the region, comes in no better than sixth.

"There has been a bit of a recalibration in the high-end markets," said John Karevoll, an analyst with DataQuick, pointing to beach cities Redondo Beach, Hermosa Beach and Manhattan Beach as examples. "There was more hidden value residing in those neighborhoods that hadn't manifested itself."

Palos Verdes leads pack

In ranking the wealthiest ZIP codes in L.A., the Business Journal factored eight variables. Estimated 2003 household net worth carried the most weight in the scoring, followed by estimated 2003 household income (see story, page 16).

Among the categories, the biggest surprise was that education, which carried the lowest weight among the variables, had the highest correlation with overall scores. Of the 10 wealthiest ZIP codes, all ranked among the Top 15 in education, defined as the percentage of adults age 25 or older with a master's degree or above.

Does that mean education is a path to wealth, as generations of middle-class parents have been conditioned to believe, or is it simply that the wealthy receive better educations?

Marge Nichols, research director of the United Way in Los Angeles, has long been aware that wealth and education coexist. Yet she's unsure as to cause and effect. "Certainly those persons that are wealthy for their professional qualifications are going to have a high education," she said.

L.A.'s two best-educated ZIP codes are 90077 in Bel-Air (No. 1) and 90024 in Westwood (No. 2), both near UCLA. Westwood managed to finish 13th overall, despite second-tier income and net worth rankings (48th and 51st, respectively), and one of the highest poverty rates in the county (252nd, thanks to all those starving students). Pulling Westwood up were its high home prices, high levels of political and charitable giving and education.

Other nuggets: Some wealthy ZIP codes, such as Rancho Palos Verdes (90275) and Manhattan Beach (90266) ranked high in charitable giving but not so high in political giving. In Bel-Air (90077) and Santa Monica (90402) the opposite was true. Some communities--Brentwood (90049), Westwood (90024), Pacific Palisades (90272) and Beverly Hills (90210)--gave generously in both departments, while San Marino (91108) and La Canada/Flintridge (91011) ranked high in neither category.

Some of these deviations involve the ethnic makeup of the neighborhoods, Nichols said. Jewish populations concentrated on the Westside tend to have high rates of both charitable (including religious) and political giving. On the other hand, San Marino and La Canada/Flintridge have a high proportion of recent immigrants who tend to give more within families and their own ethnic groups than organized charities. And they haven't yet become as active in politics.

San Marino, for example, has a high ethnic Chinese population, while La Canada/Flintridge is home to a newer group of wealthy ethnic Koreans who have settled after arriving in the U.S. since the mid-1970s.

Poverty rates among the city's wealthiest communities were also widely dispersed. Palos Verdes (90275) had the lowest in the county, while Westwood was sandwiched between Long Beach's 90806 (adjacent to Signal Hill) and the Crenshaw district (90018).

The ZIP codes that scored best were the most homogeneous. Areas with newer developments, such as Valencia (91354 and 91355) and Westlake Village (91361) made the Top 10 list, along with traditionally insular communities such as Palos Verdes (90275 and 90274) and Sierra Madre (91024).

But it was median home prices, spurred by the housing boom, that did the most to scramble the rankings.

Ten years ago, Bel-Air's 90077 had the third-highest home prices in L.A. County, according to DataQuick. Had home prices kept up, Bel-Air would have contended for the No. 1 ranking that was secured by L.A.'s wealthiest ZIP code, 90275 on the Palos Verdes Peninsula.

In the end, Bel-Air ranked 14th in 2003 for median home resale prices, below West Hollywood, Hancock Park and three of Santa Monica's five ZIP codes. Its overall score left it in third place.

Left behind

For all its wealth, L.A. is also home to great numbers of people living below the poverty line--above 50 percent in some areas. With few exceptions, the very richest remain far removed from the very poorest. "I've always suspected that the freeways do an enormous amount to conceal poverty," Nichols said. "You can commute, say, to Palos Verdes and never see a poor neighborhood."

By far, the largest and most marginalized population is South-Central, a historically African-American district that is now flooded with newly arrived immigrants from Mexico (Central Americans tend to disembark in the Pico/Union district). These neighborhoods are characterized by low incomes, a young population with lots of children, high unemployment and "abysmal" educational achievement linked to large numbers of non-English speakers.

There are still significant numbers of African Americans in South-Central L.A., but for the most part, those able to escape to better neighborhoods have done so.

South-Central ZIP codes 90003, 90011, 90059 and 90002 all showed very low levels of per capita income, a sign that large families are financially overburdened.

And low home values in the high desert are a reminder that while escalating home prices may seem inevitable, they're not guaranteed. Many of the homes built in Palmdale and Lancaster under low-income Housing and Urban Development programs in the late 1980s were subject to HUD foreclosures in the real estate bust of 1991 to 1996, Karevoll said.

HUD auctioned them off in the late 1990s, marketing the homes to urban buyers as a way to escape the inner city. Those neighborhoods have shown some of the lowest price gains since 1993.

Now, Karevoll said, the mix between low-income and traditionally qualified buyers has improved, and the Palmdale/Lancaster area is generating a high number of jobs. "If you have half a million bucks right now," he said, "I'd put it in Palmdale or Lancaster."

BY THE NUMBERS

HOME PRICES

                                           2003 Median
                                           Home Resales
Rank   Community                ZIP Code      Value

 1     Santa Monica              90402     $1,510,000
 2     Beverly Hills             90210      1,475,000
 3     Pacific Palisades         90272      1,325,000
 4     Malibu                    90265      1,305,000
 5     Brentwood                 90049      1,256,364
 6     West Hollywood            90069      1,155,000
 7     Beverly Hills             90212      1,145,000
 8     Palos Verdes Peninsula    90274      1,050,000
 9     Manhattan Beach           90266      1,050,000
10     Santa Monica              90403      1,035,000

Income

                                           2003 Median
                                            Household
Rank   Community                ZIP Code     Income

 1     Bel-Air                   90077      $167,460
 2     Pacific Palisades         90272       141,489
 3     Palos Verdes Peninsula    90274       135,991
 4     San Marino                91108       132,949
 5     Santa Monica              90402       129,944
 6     La Canada/Flintridge      91011       123,470
 7     Beverly Hills             90210       122,811
 8     Calabasas                 91302       118,678
 9     Manhattan Beach           90266       114,874
10     Malibu                    90265       111,507

Political Involvement

                                            Contributions
                                              2003-2004
Rank   Community                ZIP Code   Election Cycle *

 1     Beverly Hills             90210       $2,722,204
 2     Brentwood                 90049        1,998,399
 3     Westwood                  90024        1,455,264
 4     Century City              90067        1,452,888
 5     Pacific Palisades         90272        1,268,535
 6     Bel-Air                   90077          994,003
 7     Beverly Hills             90212          909,205
 8     West L.A.                 90025          840,688
 9     Santa Monica              90402          793,979
10     West Hollywood            90069          788,959

* Through February 2004

Lowest Poverty Rates

                                                          Percent
                                                           Below
                                                          Poverty
Rank   Community                ZIP Code    Population     Line

 1     Palos Verdes Pen.         90274        24,892       1.96%
 2     Valencia                  91354        17,832       2.58
 3     Rancho Palos Verdes       90275        41,431       2.89
 4     Valencia                  91355        25,144       2.89
 5     Manhattan Beach           90266        33,924       3.26
 6     Stevenson Ranch           91381        10,200       3.39
 7     Westlake Village          91361        18,840       3.40
 8     Santa Monica              90402        11,200       3.57
 9     Sierra Madre              91024        10,536       3.73
10     Pacific Palisades         90272        22,636       3.82

Luxury Homes

                                        % of '03 Home
                                         Sales Above
Rank  Community               Zip Code   $3 Million

 1    Beverly Hills            90210        10.7%
 2    Malibu                   90265        10.1
 3    Santa Monica             90402         8.1
 4    Brentwood                90049         7.1
 5    Bel-Air                  90077         7.1
 6    Pacific Palisades        90272         5.9
 7    Palos Verdes Peninsula   90274         4.3
 8    West Hollywood           90069         4.2
 9    Marina del Rey           90292         3.8
10    Hermosa Beach            90854         3.4

Net Worth

                                         2003 Median
                                          Household
Rank  Community               Zip Code    Net Worth

 1    Palos Verdes Peninsula   90274      $373,681
 2    Bel-Air                  90077       363,333
 3    San Marino               91108       341,513
 4    Pacific Palisades        90272       331,382
 5    La Canada/Flintridge     91011       329,251
 6    Rancho Palos Verdes      90275       307,797
 7    Encino                   91436       302,224
 8    Beverly Hills            90210       290,967
 9    Calabasas                91302       284,881
10    Malibu                   90265       263,050

Charitable Giving

                                            2003
                                        Contribution
Rank  Community               Zip Code   to Charity

 1    Brentwood                90049     $7,329,859
 2    Manhattan Beach          90266      7,005,493
 3    Rancho Palos Verdes      90275      6,797,253
 4    West Hollywood           90046      5,808,674
 5    Pacific Palisades        90272      5,263,761
 6    Westwood                 90024      5,243,043
 7    Palos Verdes Peninsula   90274      5,208,919
 8    Bel-Air                  90277      5,113,225
 9    Long Beach               90803      5,105,054
10    Beverly Hills            90210      5,063,408

Most Educated

                                         Population      Percent
                                           Age 25      With Masters
Rank  Community               Zip Code    or Older       or Above

 1    Bel-Air                  90077        7,016         38.2%
 2    Westwood                 90024       25,560         35.1
 3    Pacific Palisades        90272       16,569         35
 4    Santa Monica             90402        9,684         34.6
 5    Brentwood                90049       27,257         33.2
 6    San Marino               91108        9,087         33.2
 7    Palos Verdes Pen.        90274       18,374         29.6
 8    La Canada/Flintridge     91011       13,783         29.1
 9    Manhattan Beach          90266       26,021         28.6
10    Encino                   91436       10,972         27.6

Source: DataQuick Information Systems; U.S. Census Bureau;
Federal Election Commission; Claritas Inc. estimates