California’s Real Estate Slump Deepens

Despite signs of life in the national housing market, home prices and sales fell in California and other Western states last month as the region continues to sit out the economic recovery.

Sales of existing single-family homes in the United States rose 1.9% in June, the third consecutive monthly increase, the National Assn. of Realtors reported Monday. The median home price rose 2.3% from a year ago to $108,900 nationwide.

But in the West, sales of existing homes fell 1.3% from May, and the median price slipped 2.2% from a year ago to $142,700.

The sales dip was more pronounced in California, where sales activity declined 3.1% from May to June, and the median price of a previously owned home was $190,460, 4.6% lower than in June, 1992.

Home sales in California “have not met our expectations,” said California Assn. of Realtors President Walt McDonald, who added that he no longer anticipates 1993 home sales in California will reach the 2% growth rate that the association had projected earlier in the year.

“The real recovery will probably be in 1994,” McDonald said.

McDonald said public uncertainty surrounding President Clinton’s budget package and health care reforms, as well as uneasiness with California’s state budget negotiations, have stunted growth.

But the primary cause of California’s economic malaise, he said, is a lack of buyer confidence that stems from concerns about job security.

Unemployment has taken a particularly heavy toll on the Southern California real estate market, McDonald said. Prices of existing homes in Los Angeles and Orange counties were down 6.7% and 6.2%, respectively, from June, 1992. Those figures represented the sharpest declines of any region in the state.

Despite sluggishness in the West, the realtors’ association predicts a strong summer selling season in most regions. Through June, sales of existing single-family homes in the United States totaled 1.78 million, marking a 3.1% increase over the total for the first six months of 1992.