For Release, January 16, 1995

1994 Annual Home Sales Hit Highest Mark Since 1989

Sales of existing housing in the San Fernando Valley rose 18.5 percent during 1994, the second consecutive year that the annual total has increased. The 12,451 properties that closed escrow last year represented the highest figure since 1989.

"Not even the Northridge Earthquake was able to slow the demand for housing that appeared as a result of the improving economy, favorable resale prices, and very favorable interest rates," said Pat A. Zicarelli, the 1995 president of the 7,200-member Association. "The earthquake had a temporary debilitating effect, but people decided to rebuild and the market did rebound."

Members of the San Fernando Valley Association of Realtors generated in excess of $2.6 billion for the local economy during 1994.

Zicarelli and Jim Link, the association's executive vice president, agreed that strong resale activity will continue into 1995 if interest rates remain favorable.

"The wild card is rates," Link said. "Further increases will stifle the market, but if rates hold steady or decline, look for a slow, consistent increase in sales and the beginning of moderate increases in resale prices."

Despite what some analysts have reported, Link said the national recession and California's economic restructuring played a much greater role in falling resale prices than the Jan. 17, 1994, Northridge earthquake.

"The doomsayers who had people fleeing the Valley in droves were wrong," Link said. "The Valley's economy is very resilient and the downward pressure on prices was more in relation to the three-and-a-half year recession than the earthquake."

The combined average resale price fell 12 percent compared to 1994, but price reductions increased dramatically depending on the price range of the home; the more expensive the home, the greater the price reduction. 1994 marked the third consecutive year that the annual average resale price declined, falling to $206,673, the lowest figure since 1987.

Unlike in 1989, when sales were booming, most of the resale activity in 1994 was the result of first-time and moderate-income buyers jumping into the market to take advantage of favorable resale prices. Five years ago, as the buying frenzy reached its peak, owners hoping to trade up to bigger and more expensive properties drove the market.

A total of 25,406 properties were listed for sale during 1994 on the state-of-the-art computerized Multiple Listing Service operated by the San Fernando Valley Association of Realtors. The listing total was down 6,793 properties from 1993, a decline of 21 percent.

! Single-Family Resale Statistics:

Single-family home sales increased a whopping 22 percent in 1994, breaking the 10,500 mark for the first time since 1989 when 12,753 single-family homes closed escrow. It was the second consecutive year that annual home sales increased.

The average resale price of single-family homes, however, fell during 1994 for the fifth consecutive year. The 1994 average was $230,917, down 10.9 percent from the 1993 average of $252,633.

The annual median resale price was $178,417, down 9.9 percent from 1993. 1994 marked the fourth consecutive year the annual median price fell and the lowest figure since the association started keeping median statistics in 1988.

The local resale market was driven in 1994 by first-time buyers rushing to take advantage of the best resale prices since 1987. The total undoubtedly would have been even higher except for the negative impact of the earthquake and rising interest rates in the second half of the year.

! Condominium Resale Statistics:

Condominium sales fell for the fifth consecutive year during 1994 as buyers opted for single-family homes and word of the new housing opportunity was slow to reach the segment of renters who for years had been priced out of even the condo market.

The 1,591 condos that closed escrow in 1994 was off only 1 percent, a significant slowing from the previous four years that had seen annual declines ranging from 20 percent to nearly 28 percent. The 1994 condo sales total was the lowest since 1985, the year the San Fernando Valley Association of Realtors started keeping separate condo and single-family statistics.

The condo average resale price fell for the third consecutive year, dropping 14.8 percent to $119,975. That was the lowest annual condo average resale price since 1987. The condo annual median price was $114,800, down 13.6 percent.

! December Sales Activity:

In anticipation of further increases in interest rates, 1994 ended on a remarkably strong note with single-family and condominium sales up more than 8 percent. The December total market the 21st consecutive monthly increase in resale activity.

A total of 983 single-family homes sold, 8.3 percent higher than November. One hundred eighty-seven condominiums closed escrow, up 8.7 percent over a year ago and 30.8 percent higher than the November total. It was the highest condo total for a December since 1989 and the best overall monthly condo sales figure since June 1992 when 202 condos closed escrow.

The 983 single-family homes that closed during December was the highest figure since December 1988, when 1,033 homes sold. The single-family median resale price was $168,500, down 8.8 percent from a year ago, while the condo median price was $98,000, off 24 percent from December 1993.

The inventory of homes listed for sale continued to fall during December with a total of 6,882 properties listed for sale, a decline of 30 percent from 1993. Of that total, 5,340 were single-family homes and 1,542 were condominiums.

The San Fernando Valley Association of Realtors is a local trade association comprised of 7,200 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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