FOR RELEASE ON: Jan. 13, 1997

1996 Home Sales Rise Nearly 15%,

Hit Highest Total Since 1989

More homes sold last year throughout the San Fernando Valley than in any year since 1989, generating widespread optimism that prices have hit bottom and 1997 will see even more resale activity, the San Fernando Valley Association of Realtors reported today.

A total of 13,458 properties changed owners in 1996, an increase of 14.7 percent over 1995Cthe best annual total since 1989 when 17,310 properties sold. Members of the San Fernando Valley Association of Realtors last year generated more than $2.6 billion for the local economy.

AThe best market for first-time buyers since the early 1970s is slowly coming to an end,@ said Mel Wilson, the 1997 president of the San Fernando Valley Association of Realtors. AWe don=t expect any sudden, dramatic increase in resale prices, but pressure on prices is sure to build when you combine a dwindling inventory with favorable resale prices, low interest rates, and growing demand for home ownership.

AI can=t recall anytime in the two decades I=ve been in the business when buyers, especially first-time buyers, had everything working in their favor,@ he said.

Despite the nearly 15 percent increase in sales, Wilson and Jim Link, the association=s executive vice president, noted that the local real estate market remains fragmented, with some price ranges red hot and others dormant.

First-time buyers have kept the market moving for the last two years, accounting for the bulk of 1996 sales. Sales have been so heavy in properties priced under $200,000 that the inventory is very low and there is little room to negotiate price reductions. Indeed, the worst of the price declines appears to be over and average resale prices may rise slightly in this price category over the next 12 months, Wilson said.

Economic growth combined with expansion of the entertainment industry also is fueling a resurgence in higher-priced homesCproperties listed for more than $500,000.This sector of the market is active in property located south of Ventura Boulevard, Link said.

While sales of low- and high-priced homes fueled the bulk of 1996 transactions, properties priced between $200,000 and $500,000 saw relatively little activity.

AIt=s that middle-ground that is still fragile,@ Link said. AThe mid-range market will see only limited activity until owners who rode out the economic recession or rebuilt after the Northridge Earthquake decide it=s time to sell.@

A lot of the drop in equity that occurred in the early 90s was, to some degree, a market correction from the supercharged increases of the 1980s, Link and Wilson said. Yet a review of average price statistics over three decades shows a consistent increase in resale prices, bolstering arguments that housing is a long-term investment and offering hope that price declines can be recaptured.

ABuying a home is still an investment with risks similar to buying a stock,@ Wilson said. ABuyers can protect their equity by adopting a more traditional, long-term viewCthat housing, first and foremost, is shelter for the family. Home ownership also offers tax benefits and has the potential of a modest long-term return on investment.@

AReal estate, like most investments, has peaks and valleys,@ Link said. AOwners who bought in the 1990s may recover some of their lost equity, but it will take longer than usual because the peak was so extraordinarily high.@

Single-family homes accounted for 80 percent of the 1996 sales, association statistics indicated. A total of 10,519 single-family homes changed owners last year, up 7.6 percent. The annual average price of $217,325 was down less than 1 percent from 1995, supporting arguments that 1996 marked the bottom of the price declines.

For the second consecutive year, condominium resales rose with the 2,939 closed escrows representing a 50,1 percent increase. The condominium annual average price of $103,017 was down 2.9 percent from 1995, marking the fifth consecutive year of price declines. However, the 1996 drop was dramatically lower than the 14.8 percent decline reported in 1994 and clearly suggests that condo resale prices also are beginning to level off.

The year ended on a high note with December single-family home sales up 11.1 percent over a year ago and condominium resales up 17 percent. Average and median prices continued during December the months-long pattern of moderate declines, a statistical fact which reflects the concentration of resale activity in entry level price categories. Combined active listings during December stood at 5,623, the lowest monthly total since January 1988.

A total of 21,916 properties were listed for sale on the regionwide, computerized Multiple Listing Service operated by the San Fernando Valley Association of Realtors. That figure was down 16.5 percent from the 26,234 listings processed in 1995.

The San Fernando Valley Association of Realtors is a local trade association comprised of 6,800 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. The San Fernando Valley Association of Realtors is also part of a growing, high-speed, computerized marketing network that spans the vast region of northern Los Angeles County and eastern Ventura County.

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