Home Sales in July at Slowest Pace in 4 1/2 Years : Real Estate: Prices of existing houses in the state also fell for the fourth straight month. The median is now $194,099.
The residential real estate market in California continued to cool in July as sales of existing houses fell to their lowest level in 4 1/2 years, an industry trade group reported Monday.
Housing prices also fell, in a continuation of a trend that began four months ago. The median price of a resale house in California is now $194,099, or 3.7% less than in July, 1989, according to the California Assn. of Realtors.
The price dip is particularly troublesome for those who bought houses at the peak of the market in 1989 and face large losses if they have to sell in today’s softening market.
The California housing market peaked in the first half of last year and has generally declined since. The slide accelerated in recent months, marked by the first year-to-year declines in housing prices since the mid-1980s.
As soft as the housing market has become, it “is probably going to get worse over the next six months,” said Kenneth Rosen, chairman of the Center for Real Estate and Urban Economics at the University of California at Berkeley. Economists blame uncertainty over the Middle East situation, which has placed a cloud over the entire U.S. economy.
According to the realtors association, the pace of housing resales statewide fell to an annual rate of 419,943 in July, off 15% from a year ago and 5.3% from June of this year. The sales figures reflect how many homes would be sold in 1990 if the July pace continued all year.
The pace of housing resales has not been this slow since December, 1985, according to Leslie Appleton-Young, chief economist for the realtors association.
The national picture was slightly better. Home sales rose 3.3% nationwide to a seasonally adjusted annual rate of 3.44 million units in July following a 0.9% gain in June.
Barring a severe recession, the California housing market should remain weak for another 18 months before it begins to recover, Rosen said. About 450,00 single-family houses will be sold in California in 1990, he predicted.
However, if a severe recession occurs, it will send the residential real estate market into a tailspin not seen since the dark days of the early 1980s, when home prices in California fell as much as 10% on a year-to-year basis, Rosen said. The market hit bottom in 1982.
The latest figures show that the overall value of single-family detached homes in greater Los Angeles has dropped 4.5% since July, 1989. The median price of a house sold in the Los Angeles area last month was $215,533, compared to $225,616 in July, 1989.
Meanwhile, house prices have risen slightly in Orange County and dropped slightly in the San Diego area, compared to year-ago levels. The median house price last month was $245,798 in Orange County and $186,182 in San Diego.
Economist Appleton-Young pointed out that the growing coolness in the housing market has come at a time when the outlook for buyers is far more favorable than a year ago. The supply of houses is up, prices are down and mortgage rates have been stable, she said, but picky buyers are holding back.
Although the housing market is in an undeniable fall, most real estate economists say there is no reason for alarm--yet.
Tough times will not come until the pace of housing resales falls below 350,000 annually, about where it was in 1981, according to Michael S. Salkin, manager of real-estate risk assessment for First Interstate Bank of California.
“We’re nowhere near a catastrophic level yet,” Salkin said.
EXISTING HOME SALES
Seasonally adjusted annual rate, millions of units July ‘90: 3.44 June ‘90: 3.33 July ‘89: 3.38 Source: National Assn. of Realtors
