Market for Homes Continues Active
Well past the first-of-the-year guessing games for housing activity during 1987, the market condition is steady as she goes.
The industry is enjoying, for the fifth consecutive year, an active and satisfactory market for both new-home and resale housing.
The increase in the prime lending rates by banks earlier this month most likely will affect home mortgage rates eventually but the present market still represents a big window for buying. Increasingly popular, the 15-year conventional mortgage rate throughout California averages out to 9.04% while the 30-year rate is 9.29%. Adjustable mortgage rates for one year start at 7.49%.
Such rates are fostering the strong sales pace. A steady stream of reports from scores of Southern California builders and realtors shows continuing, profitable activity.
Many new projects are selling out the first phase before they can stage the traditional grand opening. That could put a crimp in the balloon and banner business.
A cross-section sampling of sales reports from Brentwood, Walnut, Placentia, Escondido, Dana Point and Canyon Country all show excellent results. Some have reached the point where all that’s left to sell are the model homes, meaning there is no “next phase” and/or they’ve run out of land.
In the resale home market, the latest projections by the National Assn. of Realtors call for an increase of about 2% in sales over 1986, reaching 3.6 million or 3.7 million. Last year’s total was 3.57 million.
NAR’s chief economist, John A. Tuccillo, says his numbers suggest that this year will rank alongside the resale boom years of 1977, 1978, 1979 and last year.
Housing starts, for both single-family and multifamily units, however, are expected to drop to 1.65 million this year, down 8.6% from the 1.81 million starts of 1986. Single-family house construction should be near the 1.1-million mark, down 8.3% from the 1.2-million figure of 1986.
In the new-home sales category, he predicts 700,000 single-family houses will be sold this year, down 6.5% from last year. The rise in existing home sales will offset the decrease in new home sales, he added.
Considering that the rate of inflation this year is supposed to be about 3.5%, prices of new and existing dwellings should increase accordingly.
Tuccillo sees a price tag of $83,500 as the national median for an existing home resale this year and a median price around $95,000 for a new home, but don’t look for such prices hereabouts.
His median figure is the mid-point among the nation’s lowest- and highest-priced homes. Usually, that’s anywhere from $30,000 to $50,000 less then the traffic will bear in this area.
