FOR RELEASE: January 14, 1991

12,039 Homes Sell During 1990,

Annual Average Resale Price Jumps to Record High

LOS ANGELES--(BW)--More than 12,000 single-family homes and condominiums sold in the San Fernando Valley during 1990 at a record high average resale price of $257,192, the San Fernando Valley Board of Realtors reported today.

While home sales slowed from the frenzied pace set in 1988 and 1989, the residential resale market remained robust throughout 1990, staying well above recessionary levels, Board officials said.

"What we saw last year was the fear of recession, but it was not yet a real recession," said Steve Owen, the 1991 president of the San Fernando Valley Board of Realtors.

"Too many people make the fundamental error of judging the housing market based on the whimsical rise and fall of monthly sales," he said. "Time -- measured in years and decades -- is the only true measure of market activity in a commodity as expensive and as important as housing."

Owen said the 1990 sales total was nearly double the 6,598 sales reported in 1982, a year all experts agree marked the depths of the last true housing recession.

"Remove the uncertainty that the fear of war in the Middle East creates, and I think you'll see vigorous home sales this Spring," Owen said. "If peace prevails and the economy stabilizes, 1991 annual sales totals should equal or surpass the 1990 levels.

"But don't talk to me again about recession until this time next year, and then only if the annual total has dipped closer to that 6,500 mark."

The rise to record levels in the average resale price of single-family homes and condominiums bolsters the argument that the market remains fundamentally sound despite the slowdown of sales from record levels, said Jim Link, the Board's executive vice president.

Statistics maintained by the Board showed that prices rose in all categories during 1990, although the rate of increase fell last year from double-digit levels.

The annual average resale price of the 8,726 single-family sold last year was $296,675, up 0.5 percent from a year ago. That compares to annual price increases of 18.8 percent, 22.2 percent, 17.1 percent and 10.8 percent reported in 1989, 1988, 1987, and 1986, respectively.

And, the annual average resale price of the 3,313 condominiums sold last year was $151,983, up 5.2 percent from 1989. That compares to annual condo price increases of 13.8 percent, 6.1 percent, 7.0 percent and 1.7 percent reported in 1989, 1988, 1987 and 1986 respectively.

"I can't think of a single investment that could offer that kind of consistent annual return," Link said.

Link noted, however, that Board officials in 1988 and 1989 insisted that the rise in prices was too precipitous, that prices were rising too fast.

"A slowdown from those peaks had to occur and this is the re-adjustment period the market needs after every period of rapid price escalation," Link said.

"But anyone who has owned a home for at least two years, did not lose money, even if they had to sell during 1990," he said. "They merely saw a slowdown in the rate of appreciation or a slight erosion of the enormous equity accummulated over time."

Instead of any fundamental loss in value during 1990, buyers gained leverage last year merely because there were too many homes for sale.

Owners who had to sell in that overcrowded environment probably had to make some price concessions, but what they gave away was what they thought was a continuation of the frenzied price increases of 1988 and 1989, not real value.

"Unquestionably, with high inventory, low interest rates and stable prices, this market provides unprecedented opportunities for buyers," Link said.

"But, while some sellers may be crying over the end of double-digit annual price increases, the fact is the average residential sales price has increased 68 percent in the last five years," Link said. "Sellers aren't losing money in today's market."

A total of 37,259 properties were listed for sale during 1990 on the Multiple Listing Service operated by the San Fernando Valley Board of Realtors, Owen said. Sales negotiated by members of the Board generated $3.1 billion for the local economy.

The San Fernando Valley Board of Realtors also released December sales statistics Monday. A total of 789 properties sold, down 20.5 percent from a year ago and off 3.4 percent from November.

A total of 10,730 properties were listed for sale during December throughout the Board's coverage area, which ranges from Agoura to North Hollywood. Of that total, 8,505 were single-family homes and 2,225 were condominiums.