Home Sales in Southland Plunge in ’89
A decline in housing affordability caused sales of existing homes in the Los Angeles and Orange County regions to tumble in 1989, a California trade group reported.
In the Los Angeles region, existing home sales plummeted 12.8% in 1989 compared to the previous year, according to the California Assn. of Realtors. Orange County sales sank 16.8%, the group said.
However, sales in the inland areas, where homes are cheaper, continued to grow, and sales of existing condominiums rose a whopping 15.4%.
Statewide, existing home sales dropped 4.2%, the realtors said. Still, 1989 was the second-biggest year in the 1980s for existing home sales in California.
Across the state, 538,770 existing, single-family detached homes were sold during 1989, compared to 562,570 homes sold in booming 1988.
Given the drop in affordability, why were 1989 sales so strong?
“Essentially it was a carryover from the surge in sales that appeared in 1988,” said Leslie Appleton-Young, vice president of research and economics for the state group.
Appleton-Young said the erratic behavior of interest rates and the Federal Reserve’s squeeze on credit had created a popular “Let-me-get-in-now-before-it-be-comes-too-late” attitude among home buyers during the first quarter of 1989.
But rising prices made for weaker sales in the second and third quarters of 1989. There was a mild comeback in the fourth quarter.
In December, high prices and low demand caused home sales in California to drop 10.1%, the sharpest month-to-month drop in nearly three years, the group reported last month.
As for 1990, Appleton-Young said continued slow growth is imminent.
Appleton-Young estimated that about 480,000 homes might be sold this year, for an 11% decline.
In the Los Angeles region, the median price of an existing home surged 20.1% during 1989 to $215,472, up from $179,423 in 1988. In Orange County, the median price rose 18.6% to $245,262 in 1989, up from $206,857 in 1988.
The median price means that half of the homes sold cost more than that price, and half less.
Only 19% of state households could afford mortgage loans to purchase the $196,521 median-priced, existing single-family home, down from 24% in 1988.
And nationally, sales of existing homes crept up 2.1% during the fourth quarter of 1989, but were still down 4.3% for 1989, according to the National Assn. of Realtors in Washington.
Sales totaled a seasonally adjusted annual rate of 3.85 million units during the fourth quarter, the national group said. The national median price was $93,100.
CALIFORNIA HOUSING MARKET
Percent Percent change in 1989 change in sales median price activity Area price from ’88 from ’88 California (single family) $196,521 16.6% -4.2% California (condo) 139,299 13.5 15.4 Central Valley 97,402 11.7 15.3 High Desert 92,721 13.0 10.3 Los Angeles 215,472 20.1 -12.8 Monterey 232,191 25.1 -11.1 N. California 82,139 12.3 13.8 Wine Country 160,816 21.4 -0.9 Orange County 245,262 18.6 -16.8 Palm Springs/ Lower Desert 112,629 15.0 21.7 Riverside/ San Bernardino 124,095 16.3 -2.2 Sacramento 112,563 18.1 9.5 San Diego 175,255 18.6 8.1 S.F. Bay Area 260,592 22.5 -7.5 Santa Barbara 233,071 13.7 -7.0 Ventura 247,619 21.2 -13.9
Source: California Assn. of Realtors
1989 HOUSING AFFORDABILITY INDEX
Median Monthly Minimum home sales housing qualifying price payment annual income United States $93,100 $765 $30,604 California (single family) 196,521 1,615 64,600 California (condo) 139,299 1,145 45,790 Los Angeles 215,472 1,771 70,829 Orange County 245,262 2,016 80,622 Riverside/San Bernardino 124,095 1,020 40,792 Sacramento 112,563 925 37,000 San Diego 175,255 1,440 57,609 S.F. Bay Area 260,592 2,142 85,661 Ventura 247,619 2,035 81,396
Percent households qualifying United States 48% California (single family) 19 California (condo) 33 Los Angeles 16 Orange County 15 Riverside/San Bernardino 32 Sacramento 39 San Diego 20 S.F. Bay Area 11 Ventura 12
Source: California Assn. of Realtors
