SIGNS OF AN UPTURN : California Home Sales Surge

October sales of existing homes in California jumped nearly 11%, a realty trade group said Tuesday, as anxious sellers cut their asking prices and rising mortgage rates spurred buyers who had been sitting on the sidelines waiting for rates to bottom out.

While the statewide surge in sales--which followed a 1% rise in September and were 7.6% higher than in October, 1991--raised hopes of an economic rebound, the report from the California Assn. of Realtors pointed to continued tough times in Los Angeles County.

On a month-to-month basis, sales rose in all major metropolitan areas except Los Angeles, which showed a 2.5% drop from September. Los Angeles’ October sales were also down 2.8% from October, 1991, the report said.

“California’s housing market is picking up some steam, but L.A. is lagging a little behind other areas because it has been hit a little harder by layoffs,” said Walt McDonald, a Riverside real estate broker and president-elect of the state trade group. “Sales aren’t going to skyrocket any time soon, but I think we’re on track for a slow and steady rebound.” The October increase was the first back-to-back monthly increase since February. Sales were up about 2% in Orange County, 3% in San Diego and 4.5% in Ventura. Sales rose a modest one-half of 1% in the Riverside-San Bernardino area. Outside Southern California, sales rose about 3.8% in the San Francisco Bay Area.

But the median price of a single family home in California dipped seven-tenths of a percent from September to October, to $194,790, which some experts attributed to a growing willingness by sellers to cut their prices.

“Sellers are pricing their properties a lot more realistically, because they don’t want to waste their time holding a bunch of ‘open houses’ that nobody will come to,” said David Carden, a realtor with Riedy Co. in Long Beach.

“A house that’s priced well will sell fast. A house that isn’t priced well won’t move at all.”

Carden and other experts said the October sales gain was also fueled by buyers and sellers who were anxious to close their deals before the winter arrives.

Winter is traditionally the slowest season for home sales, largely because consumers are preoccupied with the holidays and cold weather keeps many buyers indoors.

An upturn in interest rates may also have contributed to last month’s sales increase. Rates on 30-year, fixed loans bottomed at about 7.8% in September and then jumped nearly three-quarters of a point in October.

“The rate increase turned a lot of ‘lookie-loos’ into buyers,” said Paul Havemann of HSH Associates, a New Jersey-based company that tracks interest-rate trends.

“A lot of people spent the summer on the sidelines, waiting for rates to go lower. But when rates shot up in late September and again in October, they decided to take the plunge and buy a house before rates could go up even more.”

Sales of condominiums rose 8.8% in October from September, the realty trade group said, as first-time buyers looked for less-expensive alternatives to single-family homes. Condo sales were off about 18% from a year ago.

The median sales price of a California condo was $146,160 in October, up 3.8% from the previous month but only one-half of 1% higher than a year earlier.

California Home Sales in October

Percent Percent Percent change change change in in in sales price price activity Median from from from price Sept., ’92 Oct., ’91 Sept., ’92 Statewide (single family) $194,790 -0.7 -0.6 10.9 Statewide (condo) $146,160 3.8 0.4 8.8 Central Valley $117,400 -2.6 -0.3 6.0 High Desert* $111,200 -1.9 3.3 -7.9 Los Angeles $205,530 -0.5 -5.2 -2.5 Monterey $231,060 -0.2 5.0 23.0 Northern California $138,930 2.4 2.6 -5.8 Northern Wine Country $195,770 2.1 5.0 -13.9 Orange County $232,640 0.1 -1.3 2.3 Palm Springs/ Lower Desert* $128,750 -2.3 18.1 12.7 Riverside/ San Bernardino $135,940 1.6 -2.0 0.4 Sacramento** $130,000 -0.9 -3.7 4.4 San Diego $182,240 -1.8 -0.8 3.2 San Francisco Bay Area $249,380 -2.1 -1.0 3.8 Santa Barbara* $225,000 -0.8 4.3 28.9 Santa Clara $243,530 -0.5 -2.6 0.7 Ventura $216,730 -2.9 -7.2 4.5

Percent change in sales activity from Oct., ’91 Statewide (single family) 7.6 Statewide (condo) -18.4 Central Valley -0.5 High Desert* -7.5 Los Angeles -2.8 Monterey 9.3 Northern California 41.5 Northern Wine Country -4.3 Orange County 14.3 Palm Springs/ Lower Desert* -7.6 Riverside/ San Bernardino -2.6 Sacramento** -8.6 San Diego 4.5 San Francisco Bay Area 5.2 Santa Barbara* 13.7 Santa Clara 2.4 Ventura 0.4

Notes: Regional and condo sales data not seasonally adjusted; price activity based on closed escrow sales of single-family, detached homes only (no condos). Reported month-to-month changes in sales activity may overstate actual changes because of the small size of individual regional samples. Movements in sales prices should not be interpreted as measuring changes in the cost of a standard home. Prices are influenced by changes in cost and changes in the characteristics and size of homes actually sold.

* Because of the small sample size in these areas, prices and activity changes may be overemphasized.

**Source: Sacramento Assn. of Realtors

Source: California Assn. of Realtors