Don Jergler, Staff columnist
Article Launched: 04/23/2007 12:00:00 AM PDT
If you want a consistent opinion about the real estate market, talk to Leslie Appleton-Young.
The chief economist of the California Association of Realtors will often use one of her favorite words:
"Cyclical."
Foreclosures are up, sales are down, prices are stagnant. It happened before, it will happen again, Appleton-Young has often said - and continues to say.
"We're still in the midst of a slowdown," said the Wilson High School graduate, who for the last several years has had to battle the perception there was a real estate bubble about to burst.
"The market is responding well to properties that are well-priced and in good condition," she said. "A lot of the stalemate we heard about last year was buyers holding back and expecting prices to plummet and buyers continuing to see appreciation."
CAR has forecast a statewide 7 percent drop in sales of existing, single-family homes in 2007.
In 2004 and 2005, home sales peaked, with roughly 625,000 homes sold each of those years.
Then came a 23.6 percent drop to 477,400 sales in 2006.
"We think we're going to drop another 7 percent this year to 443,900," she said of 2007. "The last time we were at that level Advertisement was 1997."
Then, 446,500 units were sold, and that was the end of the last downturn. The market had bottomed out in the early 1990s, when 343,000 homes were sold in a year. The worst year on record was 1970, when 216,000 units were sold.
The slowing sales numbers come as the number of foreclosures continues to rise.
Nationwide foreclosure filings for March rose 7 percent from February's total and 47 percent from a year ago, according to a report issued last week by RealtyTrac.
The report shows a rate of one foreclosure filing for every 775 households in March.
In California there were 31,434 foreclosure filings reported for March, the most of any state and an increase of 36 percent from the previous month, according to RealtyTrac.
The foreclosure surge pushed California's rate to one filing for every 389 households, placing the state third among all the states, behind Nevada and Colorado, according to the report.
Falling sales and rising foreclosures (placing even more homes on the market), are putting the squeeze on areas where the demand is outpacing the supply, Appleton-Young said.
CAR uses a housing inventory measure to express demand versus supply. The association uses a ratio of listings to sales - how much your supply will last, given the rate at which property is selling.
And there are "micromarkets" throughout the state that are responding differently and inventories are radically different depending on where you look.
In the Inland area, San Bernardino and Riverside, where new construction took place at a blistering pace during the real estate boom, there's now an overhang in demand, Appleton-Young said.
Expect the area to feel the pinch worse, because people flocked to the still-relatively-affordable Inland area while prices were soaring.
Those buyers went in search of affordable prices, and many were low- to middle-income families taking advantage of adjustable rate and interest-only loans to get into a home, Appleton-Young said.
"That's where you had a lot of the subprime market, households that were facing affordability hurdles being forced inland, and a lot of speculative demand for housing," she said. "The supply is there, but the demand is not."
In Los Angeles County, CAR's housing inventory measurement for February was 7.7 months. In San Diego County, there was a 10.2-month supply, and in Orange County the supply was measured at 12.5 months.
In the Riverside and San Bernardino areas there is a 17-month supply, according to CAR.
The market will get worse before it gets better, but Appleton-Young said to expect sales to pick up in 2008, and that should silence the alarmists for the time being.
"There certainly hasn't been anything like the dramatic drop in prices that people have been talking about," she said.
The economy is doing well, the stock market last week was bullish, and unemployment numbers look good, she said, amazingly avoiding her word: "Cyclical."
Don Jergler can be reached at don.jergler@presstelegram.com or (562) 499-1281.
