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CALIFORNIA HOUSING MARKET EXPECTED TO BEGIN RECOVERING NEXT YEAR; TURNING POINT IN SIGHT AFTER FOUR YEARS OF DECLINING SALES

CALIFORNIA HOUSING MARKET EXPECTED TO BEGIN RECOVERING NEXT YEAR;
 TURNING POINT IN SIGHT AFTER FOUR YEARS OF DECLINING SALES
 SANTA CLARA, Calif., Sept. 29 /PRNewswire/ -- Driven by a projected improvement in the United States economy next year, California's resale housing market will begin recovering in 1993 after four consecutive years of declining home sales, the California Association of REALTORS (C.A.R.) said in a forecast released today.
 Sales of existing, single-family detached homes in California are expected to increase 1.9 percent next year from a projected 413,000 units in 1992 to 421,000 units in 1993, according to C.A.R.'s 1993 Housing Market Forecast.
 "It's encouraging that we will see a modest increase in California home sales in 1993 after annual declines in sales for the past four years," said C.A.R. President Chuck Lamb. "The turning point in the market is arriving about a year later than we originally expected, but recovery is in sight," said Lamb. "More importantly, next year's improvement in California home sales will set the stage for modest growth in 1994," said Lamb, a San Fernando Valley REALTOR.
 Last fall, C.A.R. projected that the state's housing market would begin recovering in 1992, with a 4 percent increase in statewide sales. Given the housing market and economic conditions that have prevailed so far this year, the association now is projecting a total of 413,000 sales in 1992, down 2.6 percent from the 424,120 sales experienced in 1991.
 "The downturn in California's economy and loss of jobs in the state this year has been much more pronounced than we expected a year ago," said Leslie Appleton-Young, C.A.R.'s vice president of research and economics. "We expect the California economy to begin recovering in the second half of 1993, with Southern California continuing to under-perform the San Francisco Bay Area," Appleton-Young will say today during a speech at the Association's annual convention, held this year at the Santa Clara, Convention Center and Westin hotel.
 "Our forecast for next year is driven by a moderate improvement in the national economy -- a recovery that also will help stimulate California in the second half of 1993," Appleton-Young said. "In 1993, we will see the U.S. Gross Domestic Product increase and mortgage interest rates continue to remain favorable," she added.
 Next year's housing market promises to be favorable for all buyers in California -- particularly many first-time buyers who were priced out of the market during the booming late 1980s, the association said.
 "First-time homebuyers will continue to be a major force in 1993, and they probably will account for about half of all California homebuyers during the year," said Lamb. "Buyers will continue to find the lowest mortgage interest rates in more than two decades, a wide selection of available properties and dramatically improved affordability conditions," Lamb said.
 In the San Francisco Bay Area, for example, 23 percent of all households could afford the $257,140 median-priced home in August, up from a low of 8 percent in June 1989, according to C.A.R.'s Housing Affordability Index.
 In August, that San Francisco Bay Area household would have needed a minimum annual income of $71,633 to purchase the median priced home, based on the formula used to calculate the index. In June 1989, that minimum income requirement was $91,920 -- or over $20,000 more.
 Similar sharp improvements in affordability have occurred throughout the state in the last three years. In Los Angeles, C.A.R.'s Housing Affordability Index was 30 percent in August, up from only 10 percent at its low point in June 1989. Thirty-one percent of all households in California, meanwhile, could afford to purchase the state's median-priced home in August, up from a low of 14 percent in June 1989.
 When preparing the forecast for next year's housing market, C.A.R. economists analyzed key economic data and indicators for the U.S. and California economies. Here are other highlights from the association's 1993 Housing Market Forecast:
 -- The statewide single-family median home price for 1993 is expected to be $194,600, down 1.0 percent from the revised projection of $196,600 for this year. (The $196,600 figure for this year represents a 2.1 percent decline from the revised $200,750 median price registered in 1991.);
 -- The forecast calls for a moderate 2.3 percent expansion in the U.S. Gross Domestic Product (GDP) during 1993, up somewhat from a projected 1.8 percent GDP rate for this year;
 -- Condominium sales in California are expected to remain unchanged in 1993, after registering a projected 8 percent decline this year, compared with 1991. (C.A.R. previously forecast a 2.5 percent increase in statewide condominium sales for 1992, compared with 1991.)
 The condominium market has been affected as more first-time buyers opt to purchase favorably-priced, single-family homes in many areas, the association said. Condominiums, however, will remain an affordable alternative in 1993 for first-time buyers -- particularly those who want to purchase homes in the more expensive areas of major urban regions like Los Angeles and San Francisco; and
 -- The statewide median condominium price for 1993 is expected to stabilize at $147,400, unchanged from the revised projection of $147,400 for this year. (That figure represents a 1.0 percent increase from the $145,940 median condominium price registered in 1991.)
 The California Association of REALTORS is a statewide trade association with 126,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.
 1993 FORECAST FACT SHEET
 California Association of REALTORS
 1991 1992 1993
 Actual Projected Forecast
 United States
 Real Gross
 Domestic Product -1.2 pct. 1.8 pct. 2.3 pct.
 Unemployment Rate 6.6 pct. 7.4 pct. 7.5 pct.
 Inflation Rate 4.2 pct. 3.2 pct. 3.3 pct.
 Mortgage Rates
 Fixed 9.2 pct. 8.4 pct. 8.3 pct.
 Adjustable 7.1 pct. 5.6 pct. 5.8 pct.
 California
 Single-Family Resales 424,120 413,000 421,000
 Percent Change -6.2 pct. -2.6 pct. 1.9 pct.
 Condo Sales
 Percent Change -13.5 pct. -8.0 pct. 0.0 pct.
 Median Prices
 Single-Family $200,750 $196,600 $194,600
 Percent Change 3.6 pct. -2.1 pct. -1.0 pct.
 Condo $145,940 $147,400 $147,400
 Percent Change 1.7 pct. 1.0 pct. 0.0 pct.
 Permits
 Single-Family 73,800 80,000 95,000
 Percent Change -28.9 pct. 8.4 pct. 18.8 pct.
 Multi-Family 32,100 24,100 30,000
 Percent Change -46.9 pct. -25.0 pct. 24.5 pct.
 Source: California Association of REALTORS, Research and Economics Department, September 1992.
 -0- 9/29/92 R
 /CONTACT: Lotus Lou or Jeff Hershberger, both of the California Association of REALTORS, 408-986-0700 (ask for Camino Real Room) Sept. 29 only, or 213-739-8304/ CO: California Association of REALTORS ST: California IN: FIN SU:


JB -- LA003 -- 4402 09/29/92 12:52 EDT
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