Home Sales in Southland Fall to 3-Year Low : Housing: The 1% decline in December is another sign of the region’s economic slump. And the industry sees nothing in the near term that would help cause a turnaround.
Southern California home sales fell in December to their lowest level in three years, providing further evidence of the region’s deep housing slump and more sobering news for its faltering economy.
Only 18,582 new and existing single-family homes exchanged hands in Los Angeles, Orange, San Diego, Riverside and San Bernardino counties last month, according to TRW Marketing Services. That is 1% lower than November’s depressed level and 30% below comparable year-ago figures.
For all of 1990, Southern California home sales fell 15%, but prices rose modestly overall both during December and the full year, according to TRW.
Moreover, because of rising unemployment and the launch of war in the Persian Gulf, some industry experts believe that the short-term outlook remains bleak.
“Near term, I don’t see any light at the end of the tunnel,” said Angelo Mozilo, president of Countrywide Funding Corp. in Pasadena and president-elect of the Mortgage Bankers Assn. of America. “I think what we saw in December we will see again in January and February. There is nothing to cause a turnaround.”
In fact, things might get incrementally worse, said Martin Dee, a TRW spokesman.
“January traditionally is a weak month for housing sales, even when the economy is strong and optimism is high,” Dee said. “But now, with war in the Persian Gulf and the continuing economic downturn, people will suspend their major buying decisions to a greater extent.”
These statistics are sobering for economists and residents who hoped that California would somehow escape the national economic downturn. That dream has been dashed, and now some experts fear that California may suffer as much as other regions.
Real estate is a critical element of the Southland economy, possibly accounting for as much as a quarter of the region’s economic activity--either directly through construction work or indirectly through home buyers’ purchases of household items and other goods.
Moreover, in California, housing appreciation has been a major source of wealth accumulation. Homeowners, who found themselves sitting on hundreds of thousands of dollars in equity because of home appreciation, fueled the region’s economy by borrowing against that equity for other major purchases, including cars and boats.
Until relatively recently, the local housing market was comparatively strong. However, experts now say Southern California’s real estate market is worse than many others, and certainly no better than the norm.
“What happened in December (to home sales) was not replicated across the country,” Mozilo said. “Housing markets in the Midwest and Northwest are still reasonably strong.”
The local housing market remains healthier than severely depressed regions such as New England, however, Mozilo said.
The longer-term outlook for housing locally and nationwide largely hinges on what happens in the Persian Gulf, industry experts said. In times of uncertainty, people hesitate to make major long-term commitments. Additionally, a lengthy war could also further weaken the U.S. economy, which would also negatively affect home sales.
“A home is your biggest financial commitment, so people will not buy unless they feel super-confident,” said Alan Crittenden, president of the Crittenden Report, a real estate newsletter.
But if the war turns out to be relatively short, some believe that the combination of lower interest rates and ebbing housing prices will spur many to buy and trade up.
“Before it’s over, I think 1991 is going to turn out to be a pretty respectable year,” Mozilo said.
Although housing sales were down all over the Southland, some areas were hit substantially harder than others, TRW said.
In Orange County, 1990 sales were off by only 3.3%, while sales in San Diego County fell nearly 24% during the same period. Los Angeles County sales declined 16.5%.
However, Orange County was also the only Southern California region to experience an annual decline in average selling prices, the survey said. Average housing prices slipped in Orange County by 1.2% during 1990 to $248,167 from $251,178. Orange County remains the highest priced region in Southern California.
TRW’s figures were obtained from documents filed with county recorders’ offices. The figures are not seasonally adjusted.
SOUTHLAND REAL ESTATE MARKET Southern California housing sales fell in December to their lowest level in three years, but average prices increased modestly.
Prices
County Dec. ’89 Dec.’ 90 Percent change San Bernardino 140,404 138,375 -1.4 Riverside 146,792 152,703 4.0 Orange 251,899 244,078 -3.1 San Diego 203,735 201,445 -1.1 Los Angeles 230,480 227,742 -1.2
Sales
County Dec. ’89 Dec. ’90 Percent change San Bernardino 3,646 2,401 -34.1 Riverside 3,804 2,110 -44.5 Orange 4,306 3,183 -26.1 San Diego 3,627 2,372 -34.6 Los Angeles 11,176 8,516 -23.8 Total 26,559 18,582 -30.0
Source: TRW Marketing Services
