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Valleywide Focus

Realty Board Sees Slight Upward Trend

September 04, 1993|MATTHEW HELLER

If real estate is anything to go by, the long-dormant Valley economy showed signs of sputtering back to life over the summer, according to local industry experts.

"We are guardedly optimistic that things have bottomed out and the (residential real estate) market is very slowly turning around," said Jim Link, executive vice president of the San Fernando Valley Board of Realtors.

Madalyn Seyer, research director for the Sherman Oaks office of Grubb & Ellis, said the sluggish commercial real estate market also seems to have leveled out. "We're basically bouncing along the bottom," she said.

Link said that 978 single-family homes and condominiums were sold in the Valley in July--the highest monthly total since September, 1991. About 70% to 75% of those sales were single-family homes.

August figures, which will be out next week, also appear to be shaping up well, he said.

A lot of the activity, Link said, was in the low end of the market--$250,000 and under--where first-time buyers took advantage of low prices and interest rates. "One thing the recession has done is it has opened up the market for single-family homes to first-time buyers. During the '80s, all they could afford was condominiums."

Although the low prices are bad news for sellers, Link predicted that prices might come back up as the supply of available homes decreases. "The increase in activity could be equated with some stabilization in consumer confidence."

In the commercial real estate market, the office vacancy rate--the ratio of vacant square feet to rentable square feet--in the Valley for this year's second quarter was 15.5%. That is down 0.9% from the same period of 1992. Seyer, who tracks commercial real estate, predicted that vacancy rates for the third quarter would be about the same level.

"The market has got to go up at this point," she said. Demand for existing buildings will increase, she said, because new construction has come to a virtual standstill.

But experts caution that a further improvement in the real estate market would depend on the health of the Southern California economy as a whole. "There isn't any real economic growth," Seyer said. "We're not seeing it in employment or retail sales."

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