LOS ANGELES -- California's year-long slump in home sales will persist into next year, reflecting both unrealistic pricing by sellers and a slowdown of the state's economy, real estate experts are predicting.
The slump, which was preceded by two years of rapidly rising house prices, will continue to hit hardest in the urban coastal areas, a panel of analysts said recently at the annual meeting of the California Association of Realtors.
"People selling their homes are still grasping at the price gains of a year ago," said Burland East, a real estate analyst with brokerage Bateman Eichler, Hill Richards of Los Angeles. "It takes a while for people to adjust."
The panel members agreed that a slowdown in the state's economy will also affect the housing market, which has seen sales of existing homes decline for most of this year, particularly in Los Angeles and San Francisco.
"We are in for a period of much slower growth well into 1991," said Jack Kyser, an economist with the Los Angeles Chamber of Commerce. "But even though there is a lot of hysteria, particularly from back East, California's long-term outlook is very optimistic."
Since March, California's existing-home sales have been relatively weak. The sales rate fell by 8.8 percent in March, followed by declines in subsequent months of 6.7 percent, 1.9 percent, 5.2 percent and 5.3 percent before posting a 1.6 percent increase in August.
The experts also said that from the buyer standpoint, the continued slump is good news because it means that prices, which have declined slightly this year, will probably dip a bit more into next year.
Still, William Fisher, editor of the trade publication Wednesday Wrap, said, "I don't think prices are going to fall appreciably more than they already have."
He added, "If you build an affordable house and put it on the market this afternoon, it will sell."
Given the market conditions, Fisher predicted that the inventory of lower-priced homes would increase in the coming years. He reminded real estate agents that the number of classic two-parents-with-two-kids families has declined, with singles and seniors becoming the largest potential market for homes.
East said the state's housing market won't fall into a severe decline such as markets in Texas and New England did because housing in California remains in short supply.
"There is a price that homes will sell at, because there is plenty of demand out there," East said.
He said that much of the slowdown will occur in the high-priced areas near the coast, because potential home buyers face not only a financial squeeze but nerve-wracking commutes.
"At some point, the quality-of-life issue begins to override the attractiveness of living in a specific location," East said.