‘Slow’ Season Sets Fast Pace
This is the “slow season,” in the vernacular of the nation’s real estate industry, but you’d never know it from the weekly sales reports we see from scores of home builders throughout Southern California.
In the wake of active sales, many of them now are worried about their dwindling inventories.
Two good examples are the San Gabriel Valley and the Ventura County markets. Diane Wilson, sales manager of Residential Housing Survey for the Torrance-based Comarc Systems, reports:
“The number of active projects is at an all-time low” in the San Gabriel Valley’s new housing inventory, leaving a 10.6-week supply at current sales rates. The average sales rate is a healthy 1.14 per week per development.
As the supply of developable land continues to diminish, builders are forced to look elsewhere for their next projects. Meanwhile, they are building out as fast as they can to satisfy buyer demand.
“This mature residential market continues to generate strong sales activity, despite the lack of available land and high-priced products, but its central location to Los Angeles County’s employment markets makes the San Gabriel Valley a desirable place to live. Sales activity is currently reflecting the traditional end-of-summer variations. Summer is over and sales activity has peaked, with inventory near an all-time low, and sold-out projects have reduced the number of active projects to an all-time low for this market.
“On the bright side, average sales per week per development are near record highs, so developers . . . with inventory and those about to bring product to market should continue to enjoy sales success for the near future,” she said.
To the northwest, “Ventura County is running out of new homes,” Wilson reported.
“New housing developments in Ventura County have an all-time low level of inventory available for sale. (There were 480 detached homes and 444 town houses unsold as of Sept. 1).
“This represents a 9.3-week supply at current sales rates. The autumn sales pace is fast, and median prices continue to climb,” Wilson noted. The median price for a detached home now stands at $191,549 while the median price for an attached home is $116,911. Detached-home sales account for 63% of all new housing sold in Ventura County.
She added that residential housing sales there are the highest since 1981 for the late-summer and early-autumn period. Despite currently unresolved agriculture/development issues, population and the number of households will increase by 10% or more during the next five years, she said. Therefore, home sales activity will continue for the near future.
With mortgage interest rates maintaining a steady position-- under 11%--the housing affordability index at its highest level in eight years, little inflation and a relatively slow rate of home price appreciation, prospects for the 1987 housing market seem bright for the National Assn. of Realtors.
Clark E. Wallace, a Moraga, Calif., realtor and president of the NAR, noted happily that the new tax-reform act assures the continuation of that which is dear to the hearts and wallets (and purses) of home buyers and owners: mortgage-interest and property-tax deductions on not one, but two homes.
But a summertime survey of consumers hoists a warning sign.
A Gallup Poll conducted for Century 21 Real Estate Corp. warns essentially that a good thing can’t last too long. From among a sampling of 1,024 adults--18 years and up--52% expected that interest rates will rise next year; only 11% expected them to drop further.
Among respondents most likely to buy a home--those in the 25 to 40 age bracket--86% said this is the time to buy a house. Among all respondents, 70% had the same opinion.
Realtors, of course, would say “aye.”
