FOR RELEASE: Monday, Jan. 13, 1992

Low Interest Rates, High Housing Inventory

Offset War and Economic Fears of 1991

LOS ANGELES--PRNewswire--The Persian Gulf War and consumer uncertainty over the health of the national economy hurt local housing in 1991, but low mortgage interest rates and a vast selection of quality homes for sale held the sales decline to a moderate 6.7 percent.

A total of 11,231 single-family homes and condominiums sold last year, down 808 sales from the 12,039 sales reported in 1990, the San Fernando Valley Board of Realtors reported today. The 6.7 percent drop in 1991 home sales compares favorably to the 30.5 percent drop reported from 1989 to 1990, Board officials said.

The annual total, while unquestionably down from the boom year of 1988 when 19,714 properties sold, was 4,600 sales better than 1982 and 2,600 sales better than 1970, two years that marked the depths of twin recessionary cycles.

That suggests, said Lorrie Griffey, Board president, that characterizing 1991 as a "depressed" year, rather than a "recession," would be inaccurate.

"We're guardedly optimistic that consumer confidence will return in 1992," Griffey said, "partly because we're already seeing more activity and the number of escrows closed in December was unusually strong."

Members of California's largest local Board of Realtors reported a total of 818 sales in December, up 3.7 percent from 1990 and 7.8 percent higher than the total reported in November.

The combined average price of December sales was $237,800, down 8.4 percent from a year ago and 8.5 percent behind the November average. Listings of properties for sale during December were 9.3 percent higher than a year ago, but off 10.4 percent from the previous month.

A total of 32,548 owners listed their property for sale during 1991 on the computerized Multiple Listing Service operated by the San Fernando Valley Board of Realtors. That figure was down 4,711 from the 37,259 listings reported in 1990 and 5,050 lower than the record high 37,598 listings of 1989.

"If the war with Iraq had not glued everyone to CNN news reports during the first quarter of the year," said Jim Link, the Board's executive vice president, "it's possible that sales would have been comparable to 1990.

"I don't want to lie and say the local real estate market is great, but we're really not that far off a normal market sales pace," Link said. "And, while prices have softened and activity is concentrated in lower price ranges, there is absolutely no sign that the bottom has fallen out of residential real estate."

Every business experiences peaks and valleys of sales activity, Link said.

"For real estate, it's the peaks that are abnormal, those periods when sales go absolutely berserk," he said, "not the periods like today of adjustment and relatively calm, deliberate homebuying."

For the first time since 1985, when the Board started keeping separate statistics, the annual average resale price of single-family homes fell a moderate 1.7 percent to $291,717. That average was off $4,958 from the $296,675 annual average resale price reported in 1990.

In every other year since 1985, the single-family annual average price had increased, Griffey noted.

While asking prices have come down from unreasonably high levels and higher price ranges are softer than more affordable housing, the actual sales price has held relatively stable, Griffey said.

The 8,585 single-family homes sold last year accounted for 76 percent of the total local resales activity, Board statistics indicated. That figure was down only 1.62 percent from 1990, compared to a 31.6 percent dropped reported between 1989 and 1990.

"Given a chance, people will buy single-family homes," Griffey said, "and there were plenty of smart buyers last year who realized that high inventory and low mortgage interest rates presented a golden opportunity."Indeed, some buyers who would have been limited to condominiums in a strong market, were able to purchase a single-family home during 1991, Link said.

A total of 2,646 condominiums sold last year, down 20.1 percent from the 3,313 condo sales of 1990.

The annual average condo resale price was $153,208, up 0.8 percent from the 1990 annual average of $151,983. Condo prices have shown an increase in every year since 1985, Board statistics indicated.

"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," Link said, "but, frankly, it's too soon to tell."

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