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SAN FRANCISCO WILL LEAD CALIFORNIA REAL ESTATE, FITCH SAYS -- FITCH FINANCIAL WIRE --

 SAN FRANCISCO WILL LEAD CALIFORNIA REAL ESTATE, FITCH SAYS
 -- FITCH FINANCIAL WIRE --
 NEW YORK, Oct. 26 /PRNewswire/ -- San Francisco real estate will continue to weather the economic downturn far better than Southern California, especially the Los Angeles area, Fitch says.
 These are some results of a nationwide real estate price study by Fitch and The WEFA Group which forecasts price and foreclosure rates over the next five years for six separate regions of California. Results of the study are used in rating securities backed by residential mortgages. Fitch rates 335 mortgage-backed transactions totalling $115 billion.
 Recent events combined to soften California's traditionally strong real estate market, including rising unemployment and faltering new home construction. Southern California remains substantially weaker than the northern part of the state.
 Fitch's pessimistic scenario calls for a faltering economy marked by a 50 percent increase in unemployment rates to roughly 7.5 percent in San Francisco and 15 percent in Los Angeles. Even under these adverse conditions, home prices in San Francisco are seen falling a maximum of 7 percent from their present $262,000 average to roughly $243,600 within the next five years, then leveling off. In Los Angeles, the dropoff is severe, as the average home price, currently $223,700, would lose as much as 18 percent to $184,300. In a more likely scenario of a slowly recovering economy, San Francisco home prices are seen rising about 3 percent annually over the five-year span while Los Angeles home prices are flat.
 The improved mortgage-backed rating criteria reflect Fitch's continued recognition of regional variations in housing conditions, which are driven by differences in local economies. Where Fitch previously divided the nation into six large regions, 43 distinct metropolitan, state, and multi-state regions are now used. California's six regions are 1) Sacramento, 2) San Francisco and Oakland, 3) Los Angeles, Long Beach and Anaheim, 4) Riverside and San Bernardino, 5) San Diego, and 6) all other areas of the state.
 Fitch, working with The WEFA Group, developed an econometric model, based on regional economic influences, which forecasts residential home prices and mortgage foreclosures for each of the 43 regions. The model is derived from trends in the housing market since 1972. Key economic factors considered include the area's unemployment rate, employment growth, income growth, change in home prices, home sales, population growth, industry mix, housing stock, and housing affordability.
 -0- 10/26/92
 /CONTACT: Gregory Raab, 212-908-0536, Mary Sue Lundy, 212-908-0526, or Ken Rosenberg, 212-908-0609, all of Fitch/ CO: Fitch Investors Service ST: California IN: SU: RTG


TS -- NY022 -- 4588 10/26/92 09:15 EST
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Date:Oct 26, 1992
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