Home Sales Fall 10.1% Statewide; Biggest Drops Are in Southland
Hurt by high prices and low demand, sales of existing single-family homes in California plunged 10.1% in December, the sharpest month-to-month drop in nearly three years, a realtors’ trade group reported.
Sales in the Los Angeles and Orange county regions suffered the worst declines of all areas statewide, falling 25.4% and 23.2%, respectively, from November on a non-seasonally adjusted basis, according to the California Assn. of Realtors.
Nationwide, the picture was somewhat better in December. Sales of existing single-family homes dropped 1.1% in the month and 4.6% for all of last year, putting sales at the lowest level since 1985, according to the National Assn. of Realtors.
The sharp drop in California sales ended a short-lived recovery in November, when sales perked up by 13.8% from October.
Across California, a total of 501,494 existing single-family detached homes were sold during December on an annualized basis, down from an annualized rate of 558,096 sold in November. That’s the highest month-to-month drop since January, 1987, when sales sank 22.4% from the previous month because of new tax laws, the California realtors’ group reported.
“The problem in California is our demand (lags behind) our supply,” said Leslie Appleton-Young, vice president of research and economics for the state group. She said a continued decline is likely in 1990.
She said government aid to help first-time home buyers and incentives for builders to construct lower-priced homes are needed to improve housing affordability in California. However, sales in such cities as Bakersfield and Sacramento, where housing is more affordable, have helped reduce the state’s median home price tag, Appleton-Young said.
The median price of an existing, single-family California home sold during December was $188,477, down 3.5% from $195,400 the previous month, but up 6.3% from the $177,285 reported in December, 1988. The median price means that half of the homes sold cost more than that level, and half less.
Sanford R. Goodkin, a San Diego real estate consultant, said “sticker shock” and the fear of increased prices and low appreciation compelled home buyers who would have normally entered the market in 1990 to prematurely seek homes in 1988 and 1989.
He said figures in January and February would probably bounce back, as long as interest rates don’t increase.
In the Los Angeles region, the median price of a home sold dipped 3.7% to $216,314 in December from $224,625 in November. In the Orange County region, the median home price rose 2.4% to $248,664 in December from $242,765 in November.
Sales of existing homes nationwide totaled 3.43 million units in 1989, compared to 3.59 million in 1988, the strongest year of the 1980s, according to the national real estate group. They reached 3.21 million in 1985 after recovering from the 1982 recession-year total of 1.99 million.
In December, sales nationwide totaled a seasonally adjusted annual rate of 3.55 million units, down from the previous month partly because of severe weather over much of the country, the national group said.
The 1989 median price of an existing home nationwide was $93,100 last year, up 4.3% from 1988. The median price in December was $92,500.
Also, recent fears of rising inflation and the refusal by the Federal Reserve to loosen credit conditions to contain the economy hiked 30-year fixed-rate mortgages, which affected home sales.
The fixed mortgages shot up to 9.9% last week from 9.8% the week before, according to the Federal Home Loan Mortgage Corp. That’s the highest rate since Oct. 20, when it stood at 9.92%.
And in the West, rates surged to 10.08% from 9.93% a week earlier, said the group, referred to as Freddie Mac.
The annualized rate represents what would be the total number of homes sold in 1989 if December’s pace were maintained throughout the year. This is adjusted to account for seasonal factors that influence home sales, said the California realty association.
CALIFORNIA HOUSING SALES
Table shows selected resale markets. Figures are based on closed escrow sales of single family detached homes. Regional sales data not seasonally adjusted.*
% change % change in Median in price sales activity Region price from Nov. ’89 from Nov. ’89 Los Angeles $216,314 -3.7 -25.4 Monterey $232,352 -0.3 -23.0 Orange Co. $248,664 +2.4 -23.2 Riverside/ San Bernardino $125,488 -1.9 -13.6 Sacramento $123,064 +3.9 +7.0 San Diego $175,669 -1.9 -16.0 Bay Area $257,535 -1.7 -14.9 Santa Barbara $257,273 +2.9 -5.5 Ventura $244,885 -2.9 -9.1
* Month-to-month changes in sales activity may overstate actual changes because of the small size of individual regional samples.
Source: California Assn. of Realtors
