In Manhattan, epicenter of the Oct. 19 stock crash, realtors report that apartment hunting has all but stopped. In Connecticut, two brokerage houses quickly canceled expansion plans after the stock market's tumble, and realtors there worry what will happen in affluent neighborhoods where many brokerage executives live.
But in the San Fernando Valley, Black Monday seems to have had little or no impact in real estate circles.
Valley realtors, leasing agents and mortgage lenders admitted that many of their clients have come down with a case of the jitters, but that most are proceeding with plans made before the stock market collapse. The market "had no effect whatsoever on our closings," said Mike Glickman, who heads Mike Glickman Realty. Glickman said all of his 138 houses in escrow have closed as scheduled since the stock market collapse.
Meanwhile, Fred Sands, who heads Fred Sands Realtors, reports that 30 clients canceled plans to buy homes in the greater Los Angeles area because of stock market losses. Sands would not say how many of those homes were in the Valley. "But for every one that backs out, there is someone else who calls to buy," he said.
Indeed, for most of the year, the Valley housing market has boomed. The average price of a single-family house in the Valley hit a new high for eight consecutive months, reaching $213,700 in September.
One of the underlying strengths of the local residential market--and one reason for high prices--is the shortage of houses and condominiums for sale. The inventory of available houses and condominiums fell 21% between September, 1986, and September, 1987.
There is a good chance stock market problems will drive Valley home prices even higher, according to local realtors.
Since the stock market fell, mortgage rates have fallen, making it easier for prospective buyers to bid for homes. Last week, the average 30-year fixed-rate mortgage was 11.39%, down almost half a point from the week before, according to Bank Rate Monitor, a national newsletter. The average adjustable rate mortgage was down slightly, to 8.41%.
Real estate also could attract cash from former stock market investors looking for a safe haven. "Our biggest competition has been the stock market," said Bruce Kusada, a real estate broker with the Charles Dunn Co. in Encino. "People would ask, 'Stocks are performing so well, why should I stick my money in real estate?' They're not asking that any more."
During the 1978-1981 recession, real estate outperformed stocks nationwide as an investment.
The one possible weakness in the immediate future, local realtors said, might be in the upper end of the market, those homes selling for more than $500,000. People who buy and sell such expensive homes are more likely to have been hurt by losses in the stock market, realtors said.
Glickman notes that the fourth quarter usually is the Valley's slowest sales period, but lower mortgage rates might change that. "Any agent who is thinking of taking Christmas off better change their plans," he said.
As for the commercial real estate market, Bill Ripberger, assistant vice president of Cushman & Wakefield, a Woodland Hills commercial real estate firm, said, "There hasn't been any dark day in Valley real estate because of the stock market."
Although publicly traded companies in the Valley saw their stocks drop in value by hundreds of millions of dollars, only one such company has canceled expansion plans, Ripberger said.
For the third quarter ended Sept. 30, Grubb & Ellis Co. reported that the office vacancy rate in the San Fernando and Conejo valleys dipped to 14.3%, a 2 1/2-year low. Currently, 2.2 million square feet of office space are under construction compared to 1.9 million square feet at the same time last year.
Commercial real estate brokers in the Valley remain decidedly optimistic. Seth Dudley, leasing agent for Encino Terrace Center on Ventura Boulevard, has been struggling to find enough tenants to fill the building since it opened January, 1986.
Encino Terrace had been considered something of a white elephant because of its white facade, low occupancy level and its size (six stories high and nearly as long as two football fields). A year ago at this time, the building was only 10% to 15% leased. Last week, Dudley said Encino Terrace is 47% full and he expects at least another 10% of the space to be occupied by year-end.
"We don't see any big changes coming out of this crash," Dudley said.