Housing Bubble
Residential real estate powered San Fernando Valley economy according to realtors
Residential real estate was the powerhouse that propelled the economy of the San Fernando Valley during 2002 with sales of existing housing posting the seventh consecutive year of increases in resale activity and the highest total in 14 years, according to the Southland Regional Association of Realtors.
2002 ended with 18,904 single-family homes and condominiums changing owners throughout the San Fernando Valley, a figure that was 8.9 percent higher than the prior year. It was the third highest total behind the 19,773 sales posted in 1988 and the record high of 19,964 reported in 1979.
"Realtors generated more than $6.4 billion for home buyers, sellers, and the local economy of the San Fernando Valley," said Tom Carnahan, the 2003 president of the 7,600-member Southland Regional Association of Realtors. "Every dollar spent on a home purchase yielded jobs for gardeners, builders, painters and plumbers, plus plenty of sales at the local hardware store, garden center and appliance outlet."
"2002 was the year when everyone benefited from the awesome power of residential real estate," Carnahan said. "2003 is likely to be just as strong."
Nearly three of every four sales last year were single-family homes. A total of 13,863 single-family homes closed escrow, up 10.9 percent over 2001. The only year in which more single-family homes sold was 1988 with the record 15,263 single-family sales.
The 5,041 condominium resales last year were a record high, beating the prior record set in 2001 of 4,860 by 3.7 percent.
"Demand for housing is insatiable," said Jim Link, the Association's executive vice president. "The total housing stock is insufficient and there never were enough homes listed for sale last year to come anywhere close to satisfying every prospective buyer."
Heavy demand combined with a severely limited inventory -- even though the Association processed 26,661 listings -- yielded intense upward pressure on prices.
The single-family annual median resale price rose by 19.6 percent to a record high $309,175. It shattered the prior record of $258,583 set in 2001.
Likewise, the condominium annual median resale price shot up 20.1 percent over the 2001 figure to a record high $182,625.
"The lowest interest rates in 40 years offset much of the impact of rising prices," Carnahan said. "When rates rise it will drive home the need to let incomes catch up with resale prices, but for now it appears interest rates will stay low while home sales will stay strong."
The year ended on an exceptionally strong note with single-family sales up 12.6 percent in December compared to the prior year. Condo sales rose 13.2 percent. November and December typically are the months of the year when sales taper off. But 2002 was an exceptional year: It was only the second year on record where 10 out of 12 months showed sales of more than 1,000 units every month.
Pending escrows -- a measure of future resale activity -- suggest the heavy activity reported in December will continue well into the New Year. December pending sales were up 2.65 percent with nothing but sunshine forecast for months to come.
Source: Southland Regional Association of Realtors
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