FOR RELEASE: January 10, 1994

Home Sales Rise for First Time in Five Years

Local home sales increased for the first time in five years during 1993, jumping 7.2 percent over 1992, the San Fernando Valley Association of Realtors reported Monday.

A total of 10,506 single-family homes and condominiums changed owners last year at an annual average resale price of $234,883 C a drop of 7.6 percent.

The home sales generated more than $2.4 billion for homeowners and the local economy.

The year ended on an extremely strong note as buyers rushed into the residential resale market during the final quarter of 1993 to take advantage of a large inventory of homes for sale, the lowest interest rates in more than 20 years, and extremely attractive resale prices.

The number of single-family homes and condominiums that closed escrow in December rose to 1,080. It was the first time in 29 months that the monthly total exceeded 1,000 final sales, the Association reported. The December sales total C a number that traditionally falls due to the holidays C was 28.4 percent higher than a year ago and up nearly 13 percent from November.

"Anyone who has their house listed for sale right now has a much stronger shot of selling then at any time in the last two years," said Alice McCain, president of the 7,800-member San Fernando Valley Association of Realtors, California's largest local Realtor association. "There's no doubt in my mind that we have hit the bottom of the area's economic recession, that most of the jarring changes have passed and that we're now moving into new territory."

"There's real excitement in local real estate offices," McCain said, "the buyers are out there and ready to buy and agents who haven't shown a home in months suddenly are showing property to many prospective buyers."

Neither McCain nor Jim Link, the Association's executive vice president, expected a boom resale market to return within the next two years. In view of the current guarded optimism surrounding the national and state economies, Link expected sales to increase by 4-5 percent in 1994.

Link and McCain also said sellers should not expect resale prices to return to the astronomical levels reached before the Cold War ended and California's aerospace and defense industries went into decline.

"We expect home sales to increase in 1994," Link said, "but we certainly do not expect prices to show any sharp increases."

Instead, Link and McCain expect resale prices to fluctuate up or down for at least several more months before they stabilize in mid- or late-1994 or early 1995. Only after that happens can sellers expect prices to rise, but even then only at a modest 2 percent to 5 percent annual pace.

The local market also has changed in that no longer can buyers expect to capture giant reductions in the asking price.

Most sellers now understand the economic realities, Link said, and already have adjusted their asking price to reflect the new marketplace.

"Just a few months ago a buyer could go in with a low-ball offer and expect to win," Link said, "but that won't happen now."

McCain agreed: "I'm still seeing low-ball offers come in, but when a counter-offer comes back they're being reasonable. The bottom feeders, the folks who insist on rock bottom prices and double-digit price cuts simply won't buy a house this year.

"The numbers are much stronger this year," McCain said, "much more consistent than last year and all of the numbers are pointing toward recovery."

Of the 10,506 properties that changed owners last year, 8,899 were single-family homes, Association statistics indicated. That figure was up 14.5 percent from 1992. It was the first annual increase in four years. The average resale price of single-family homes sold in 1993 was $252,633, down 10.9 percent from 1992, and $44,000 lower than the record high annual price of $296,675 set in 1990.

Condominium resales did not fair as well, falling 20.9 percent to 1,607 total sales. Last year was the fourth consecutive year that condo sales have fall by double-digit numbers. The average resale price of all condos that closed escrow in 1993 was $140,800, down 7.5 percent from the year earlier.

The San Fernando Valley Association of Realtors reported a total of 32,199 listings processed during 1993 on its computerized Multiple Listing Service. That total was only slightly higher than the 32,114 listing of 1992.

As the year ended there were 9,759 active listings, a drop of 14.4 percent from 1992.

The San Fernando Valley Association of Realtors is a local trade association comprised of 7,800 members who serve the real estate needs of the vast community spanning the Valley from North Hollywood to Calabasas. It is the largest local Association in California and the third largest nationwide.

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