State Realtors Expect 8% Dip in Home Sales in ’99

Home sales in California are expected to decline 8% next year, dampened by concerns about global economic turmoil, the California Assn. of Realtors said Wednesday.

Despite the slowdown, however, the median price of a California home should rise 4%, to a record $213,350, according to the group. This year, home prices are expected to climb 10%, to $205,140 from $186,490 the previous year.

While other analysts agreed with the mixed projections of lower sales and higher prices, they said Los Angeles and Orange counties will not be affected as much by economic conditions because the regional economy remains healthy and is still creating jobs, among other factors.

Sales of existing homes throughout the state should dip next year to 566,000 from projected sales of 615,000 this year. But that would still rank 1999 as the fourth-best year on record, even higher than some of the peak sales recorded in the frenzied market of the late 1980s, said G.U. Krueger, one of the group’s economists.

The housing market’s “underlying dynamics will remain strong,” the group said in its “1999 Housing Market Forecast” report.

Krueger pointed out, for example, that inventories of available homes remain at an all-time low and that houses are selling quickly.

Meanwhile, a shortage of lots for new-home developments will help drive the costs of existing homes higher next year, he added.

“The big caveat in this report is that there won’t be a recession,” Krueger said. “And if there is, all bets are off.”

The housing market in Southern California should be less susceptible to fallout from the Asian economic turmoil next year, in part because it does not rely as heavily on Asian exports as does Northern California, the group said.

But the financial uncertainty could slow the surge in housing prices, which this year have been climbing at their fastest rate this decade in Los Angeles County and hit an all-time high this summer in Orange County, analysts said.

The financial market’s ups and downs also virtually assure mortgage rates will remain at near-historical lows, Krueger said.

Sales in Southern California are expected to fall as much as 5% next year, while prices are expected to increase 1% to 2%, Krueger said.

Nima Nattagh, an analyst with First American Real Estate Solutions, said he expects home values to rise about 3% to 5% in Los Angeles and Orange counties.

“I think Los Angeles County will continue to see a fairly healthy housing market,” he said.