Home Sales in State Fell 6.2% in 1991 : Real estate: But O.C. showed a slight increase and there are indications of a recent upswing in activity statewide.
In a report that reflects the ravages of the recession on California, a state real estate group said Tuesday that sales of single-family homes fell 6.2% and condominium sales slumped 13.5% last year.
But that same report holds out some hope for Orange County, where a slight increase in single-family home sales ran counter to the statewide trend.
And realtors in Orange County say that low interest rates and a shift toward lower-priced homes and condominiums coming onto the market are combining to lure more buyers, especially first-time buyers, into their offices.
“It’s been almost a complete turnaround in recent weeks,” said Larry Marsters, owner of the Help-U-Sell real estate franchises for Orange, Tustin, Villa Park and Anaheim Hills. “We have a lot of listings, but more important, we are starting to get a large number of calls from people who want to buy.”
Chandler B. Barton, chairman and chief executive officer of Coldwell Banker Residential Realty in Mission Viejo, said reports from his company’s offices throughout California are leading to his being “very encouraged. The market is picking up fairly steady across the state.”
In a separate report Tuesday, the National Assn. of Realtors said sales of existing homes were nearly flat nationwide in the fourth quarter. The report suggested that a recovery in the housing sector stalled at the end of the year.
Despite the bleak 1991 figures, some real estate officials said there is evidence in recent weeks that lower mortgage rates are luring more California home buyers. Those officials also hope that President Bush’s budget proposals will spur buying.
While mortgage rates fell much of last year, they could not overcome the impact of the recession. In California, single-family home sales declined to 424,120 in 1991 from 452,100 in 1990.
The California Assn. of Realtors doesn’t report actual sales figures for individual counties but said sales volumes reported by realty boards in Orange County showed a 0.8% increase in 1991 from 1990. The last time there was an annual increase in the Orange County sales volume was in 1988.
The sales boost was probably helped by a small decline in Orange County prices while median selling prices were rising in most areas of the state.
In Orange County the $239,680 median was down 1.1% from the previous year, while the median prices in surrounding counties rose from 1.3% in Los Angeles to 3.9% in the Palm Springs area.
Although slight, realtors say, the decline has brought a sense of reality back to one of the state’s highest-priced housing markets--a market where prices soared nearly 50% between 1987 and 1990.
“For us, 1990 was a lot better year than 1991, but we have seen a big pickup in the market since early January,” said Allan Gantt, owner of Century 21 Accent Realty in Fullerton and CAR’s regional chairman for north and central Orange County.
“One problem we have with the CAR numbers is that they don’t count condominium sales (for individual counties) and that is about 15% of our business. Right now, with low interest rates, we are selling a lot of condos in the $95,000 to $120,000 range and a lot of starter homes in the $120,000 to $160,000 range. If this keeps up, we are looking for 1992 to get better every month.”
In the nation as a whole, sales declined slightly to 3.606 million housing units from 3.609 million in 1990. The national figures aren’t directly comparable because they include condominium sales.
“It’s not surprising that California home sales declined last year, given the sluggish overall economy and low consumer confidence throughout much of the year,” said California Assn. of Realtors President Chuck Lamb. He said cutbacks in state government spending and layoffs in the important aerospace industry have been “particularly damaging factors in our real estate market.”
In addition to cautious house hunters, experts said another reason for sluggish home sales is that a huge mortgage refinancing backlog has delayed many closings.
Nationwide, about 1.5 million homeowners refinanced an estimated $160 billion in mortgage debt, more than double the $72 billion of 1990. The refinancing boom has created a huge backlog at banks, thrifts and other mortgage lenders that is expected to push many home sales that would have closed in January into this month or even March.
In recent weeks, however, some California real estate firms have reported an increase in people looking for homes. The California Assn. of Realtors reported that more homes are now listed for sale and that the average time that a home is listed before being sold is dropping.
Ironically, many real estate agents said it wasn’t until interest rates began rising in mid-January that house hunters became serious. They struck deals out of fear that interest rates were bottoming out.
“Our first 2 1/2 weeks of January were not appreciably better than last year,” said Jon A. Douglas, president and chief executive of his own Beverly Hills-based real estate firm. “Then in about mid-January the rates went up about 75 basis points (three-fourths of a percentage point), and buyers thought it was time to step up and take advantage of rates.”
As a result, Douglas said, January sales at his firm are expected to rise 17% over last January’s depressed levels.
Prices also have increased statewide. The California Assn. of Realtors said the median price of an existing single-family house rose 3.6% to $200,380 in California. Los Angeles prices rose 1.3% to $214,940, but Orange County prices declined 1.1% to $239,680.
Real estate experts said it is too early to determine if President Bush’s recently announced home-buyer financial aid proposals will boost the market.
That’s because even the most recent statistics reflect housing deals struck weeks before the President asked Congress on Jan. 28 to pass a $5,000 tax credit for first-time home buyers and permit penalty-free individual retirement account withdrawals of up to $20,000 for a down payment.
But in the five-county area of Southern California, January home sales continued the downward trend. Sales declined to 7,158 homes from the 7,345 posted last year, when concern about looming hostilities in the Persian Gulf virtually halted home buying, according to John Karevoll of Dataquick Information Systems, a La Jolla-based publisher.
Resale Housing Prices Dip, Sales Climb in Orange County
While still among the highest in the state, Orange County’s resale housing prices are coming down a bit as sellers adjust their expectations to the reality of the recession. And helped by falling interest rates and lowered prices, sales volume in 1991 increased slightly over the previous year, the first annual increase since 1988.
1991 1990 1989 1988 1987 Median Price $239,680 $242,360 241,708 203,860 163,218 % Change/Price -1.1 -0.3 +18.6 +24.9 +13.0 % Change/Sales +0.8 -21.7 -16.8 +7.9 +15.5
Source: California Assn. of Realtors
