2007 homes market looks a lot like ’96

first_img 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Most of the big home sales and price reports for the first month of 2007 are in, and this year is looking a lot like 1996, sort of. Home sales will probably stay under the 1,000 level every month this year, just like they did in 1996. Price is where the two years differ though. Back in 1996 the year started with the median price home of $164,000 in the San Fernando Valley. This year started with a price 273.8 percent higher – $613,000. OK, one month doesn’t make a trend, but the evidence seems compelling that at least sales in 2007 will more closely track 1996 than any other year. Since 1984, every year but five has featured at least one month when Valley residents bought 1,000. And 2006 was one of those five years. “When we get to the end of this year, our feeling is we’ll find a market with about the same sales as last year and the median price up 5 or 6 percent,” said Jim Link, executive vice president of the Southland Regional Association of Realtors in Van Nuys. Home sales have now fallen for 16 consecutive months, though January’s was the smallest decline of this current down market. The numbers now hint that the biggest price declines are behind us. “I think quite honestly we have enough time under our belts to realize that this is a trend, and it’s going to continue this way,” Link said. “The market seems to have found a level.” Daniel Blake, director of the Economic Research Center at California State University, Northridge, concurs. “The sales were going to drop, then sort of level off. That’s what it looks like to us.” There’s still weakness in the market, though. Blake said that notices of default, the first step in the foreclosure process, are about 30 percent higher than a year ago. The actual foreclosure rate, in which a person loses a home, is about one in four. The California Budget Project notes that the slump has already taken a toll on some real estate-related sectors. Last week it issued a report showing that the slowdown is having a like impact on personal income growth and consumer spending. It’s not doing any forecasting, though. “We look at the past, we don’t predict the future,” said Jean Ross, the project’s executive director. “The take-home message for us is when you look at the housing sector’s contribution to job growth in the early years of the decade and look at the current environment, there are widespread implications.” For example, in the decade’s first five years, 61.7 percent of California’s non-farm job growth came from three housing-related industries – residential construction, residential speciality trade contracting and real estate. But they accounted for just 3.7 percent of the state’s jobs. In the preceding five years, these three sectors accounted for 6.8 percent of California’s job growth, the report said. And the surge of housing-related jobs from 2000 to 2005 helped offset weakness in other sectors. The report also found that job growth slowed last year, reflecting a deflating housing market, and it dampened the nation’s economic growth. This news didn’t resonate with everyone, though. “This is sort of, `OK, we know this news. Why bother?’ is sort of my response,” said Jack Kyser, vice president and chief economist at the Los Angeles Economic Development Corp. “Construction employment has slowed, but you are seeing other sectors pick up the beat.” Kyser said some big nonresidential construction projects are now under way (l.a.livenext to Staples Center) or recently approved (Grand Avenue project downtown) and this will ease the pressure from the housing slowdown. And Stephen Levy, director of the Center For Continuing Study of the California Economy, doesn’t see long-term fallout from the housing market slowdown. “I think that is a problem for this year. I think we will see some job losses, but what’s been fortunate so far is that throughout the state we’ve been able to offset them,” he said. In other words, sales may continue at an anemic pace but the patient will eventually recover. It’s the “when” that remains unclear. [email protected] (818) 713-3743 last_img

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