Sunday, January 23, 2005

Real estate market collapse unlikely, Realtors say

The Victor Valley's economic conditions are completely different than in 1990

By JAMES RAMAGE/Staff Writer, Daily Press

VICTORVILLE — Shear Realty's Caroll Yule remembers when the housing market stopped dead in its tracks almost overnight in the summer of 1990.

The number of people looking over model homes on weekends plunged from the hundreds to none, she said. And once the slump started, it didn't end until 1997.

Like those heady days of ballooning real estate prices before the 1990 crash, home prices in the Victor Valley have been on a rapid and stratospheric rise for the past several years. But unlike those days before 1990, real estate experts don't see any trouble in the latest price runup.

"I don't think were heading for a crash," said Don Jensen, of Century 21 Rose Realty, and current president of Victor Valley Association of Realtors. "We're at an affordable price level now that's still driving traffic to us."

Though real estate prices have dipped a small amount recently, Yule and Jensen say there is no reason for concern. The 2004 real estate market was the hottest ever, Yule said. And the supply of homes also reached some of its lowest levels, she added.

"This is a correction to overzealous pricing," Yule said. "People wanted the double-digit price increases to continue. But now our inventory is at normal levels so prices are returning to normal levels."

The economic situation in the Victor Valley, and the country, is completely different now than it was in 1990, Realtors say. With a more diverse economic base and a healthy demand for housing, the region should avoid a similar real estate collapse.

Yule and Jensen agreed that conditions specific to the Victor Valley in the early 1990s exacerbated market problems.

In the early 1990s, California started feeling the effects of a recession that crept across the nation. California lost aerospace contracts and saw the closing of many air bases — such as Victorville's George Air Force Base, the motor of the Victor Valley's economy and its primary employer.

There was also too much construction that led to speculative real estate investments, Yule said. Contractors built without regard to demand.

Today, industry, warehousing, distribution and retail jobs have been making their way to the High Desert over the past five years, Yule said. And if the rail spur is built at the Southern California Logistics Airport, the airport should be a huge, but different, source of jobs, Jensen said.

The High Desert's affordability would allow it to weather an economic downturn better than the rest of California, said Century 21 Fairway Realty Broker Jim Phillips.

According to the latest California Association of Realtors housing index, 40 percent of California households can afford to buy a home in the High Desert — the state's highest number, compared to its average of 19 percent.

If the state's real estate market cooled significantly, even to the tune of a 30 percent pullback, the High Desert region would still be able to recover its gains within a few years because of the demand and its affordability, Jensen said.


At 11:11 AM, Anonymous Anonymous said...

Whaddya say not, Caroll Yule?

At 2:09 PM, Anonymous Anonymous said...

This is a hilarious column...

People that listen to "economists" or other experts who work in the private sector do so at their own peril.

At least the real estate agents out there are acclimating for their afterlife...

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