1991 Housing Sales End in an Upturn : Real estate: The 8% increase in December signals that the market is gaining strength after the slide in interest rates. But the annual figure is 7% below 1990’s.
The San Fernando Valley’s housing market closed a lackluster 1991 with a moderate gain in December as home buyers began responding to the recent sharp drop in mortgage interest rates.
Combined resales of single-family detached houses and condominiums last month climbed 8% from November and were up 4% from a year earlier, the San Fernando Valley Board of Realtors reported Monday. The December gain offset a 4% month-to-month decline in November.
But sales for the year, at 11,231, dropped 7% from an already sluggish level of 12,039 units sold in 1990. Last year’s activity was the weakest since 1983, when 11,018 houses were sold as the nation was emerging from a major recession.
(By contrast, 19,714 units changed hands in 1988, which was the second best year after 1979, when a record 19,964 homes were sold, according to the board.)
Still, the upturn in December signaled that the market is gaining strength after the slide in interest rates, which enables more people to afford houses. Rates on conventional, 30-year fixed-rate mortgage loans have dropped to the 8% range from 9.5% or higher a year ago.
“Our phones are starting to ring a lot more,” said Mitch Rubin, sales manager at Century 21 Greene Realty in North Hollywood. “We have noticed a significant increase in December and the first two weeks of January.”
Lorrie Griffey, president of the realty board, said in a statement that “we’re guardedly optimistic that consumer confidence will return in 1992, partly because we’re already seeing more activity and the number of escrows closed in December was unusually strong.”
Rubin said much of the sales activity involves first-time buyers purchasing properties for $200,000 or less, a trend that’s been reported throughout Southern California. The so-called “trade-up” market--existing homeowners looking to buy more expensive housing--remains sluggish because the homeowners aren’t willing to assume more debt amid continued uncertainty about their job prospects and the weak economy overall.
Indeed, the plunge in interest rates primarily has prompted existing homeowners to refinance their mortgages so that they can lock in the lower rates.
Jim Link, the realty board’s executive vice president, said, “We’re hoping that today’s increased activity--more people attending open houses, more calls on newspaper advertisements and more offers being presented--will turn into more home sales, but frankly it’s too soon to tell.”
However, the soft sales market has pushed prices lower for the first time since the Valley’s realty board began keeping separate price statistics in 1985.
The average annual resale price of a single-family house last year was $291,717, down 2% from $296,675 the previous year, the board said.
In December, the average resale price of a single-family house was $262,100, down 9% from the previous month and 10% lower than a year earlier. The median resale price was $216,500, down 5% from November and 2% lower than in December, 1990. (The median means half the houses sold for more than $216,500 and half sold for less.)
The average resale price of a condominium last month was $153,900, up 2% from November and a 3% increase from a year before. And resales of condominiums totaled 184 in December, 14% higher than the 162 sold in November and a 2% increase from the 180 sold a year earlier, the board said.
For all of 1991, condo prices reached their highest level since the board began keeping track. The average resale price for condos last year was $153,383, up 1% from the previous year. But condo sales for all of last year totaled 2,646, down 20% from 3,313 in 1990.
The Valley realty board, the largest in California, reports housing sales by its members in the area from Agoura to North Hollywood. Its statistics do not include sales of most new residences.
December Valley House Sales North West: Avg. Price: $301,100 Sales: 39 North Central: Avg. Price: $263,300 Sales: 104 North East: Avg. Price: $179,800 Sales: 97 South West: Avg. Price: $284,900 Sales: 195 South Central: Avg. Price: $285,500 Sales: 74 South East: Avg. Price: $263,300 Sales: 125
Valley Home Sales 1986-1991
Single-family detached houses
% Change From % Change From Year Sales Previous Year Average Price Previous Year 1991 8,585 -2% $291,717 -2% 1990 8,726 -32% $296,675 +1% 1989 12,753 -16% $295,125 +19% 1988 15,263 +15% $248,492 +22% 1987 13,334 -5% $203,433 +17% 1986 13,985 +24% $173,708 +11%
Source: San Fernando Valley Board of Realtors
