Wendy Furth Title: President, Southland Regional Association of Realtors Age: 47 Education: B.A. in English literature, UC Davis; M.A. in screenwriting, UCLA Career-turning point: Getting involved at the state and national levels with the California Association of Realtors Most admired people: Frank Lloyd Wright and Walt Whitman Personal: Married, no children Hobbies: A 32-foot race boat, horseback riding, violin Even to Realtors Association President Wendy Furth, the Strength of the Valley Residential Real Estate Market Defies Explanation Even before last Tuesday’s attack on the World Trade Center, the American economy was in question. Growth in the second quarter, while not exactly at a standstill, managed an increase of a mere two-tenths of 1 percent. Inventory overloads particularly in the telecommunications sector had caused business to come to a near standstill in some regions and industries. And even consumer spending, one of two supposed pillars holding the economy up, was drawn into question when a Consumer Board survey found consumer confidence falling in two consecutive months. That left one pillar standing: residential real estate. Fueled in great part by successive interest rate reductions by the Federal Reserve Bank, home sales have continued to be steady in most parts of the United States. So have median sale prices. According to research by the U.S. Office of Federal Housing Enterprise Oversight, after adjustments for inflation, home prices across the country have grown 18 percent in the last four years, the fastest four-year pace since the agency began collecting data in the mid-1970s. Demand has kept those prices high. According to the U.S. Census, the national vacancy rate for owner-occupied homes is 1.7 percent, down from 2.1 percent 10 years ago. If that sounds like good news to anybody thinking of selling a house, it only gets better in the San Fernando Valley. Median home prices nationwide have climbed 6.4 percent over the last year; in the Valley, 11.3 percent. At the end of July, the median price of a home here was $270,500, a historic high. And while total home sales are down throughout California, they are up 16.3 percent over last year in the Valley. What makes the Valley residential real estate market so much hotter than an already hot national market? Business Journal editor Michael Hart asked just that question, and a few others, of Wendy Furth, president of the Southland Regional Association of Realtors. Question: How is the residential real estate business in the San Fernando Valley these days? Answer: We had predicted back in October things would slow down a little bit. With the election and everything, we had a little bit of a slowdown in November through January. In February we weren’t really too sure. But after March hit and April and May and June came around, it’s just been through the roof again. I am having a real problem this year coming up with new headlines every time we get new statistics. Consumer confidence could not be stronger in the real estate product. Properties still have a very short stay on the market. At this point, we have less than two and a half months of inventory. That’s what is stimulating the economy Buyers come to me knowing we’re very possibly at the very height of our market. But we’re seeing what Alan Greenspan is doing with those interest rates. They see what their payments can be and they know they need to buy. Because of tax reasons, it’s still the best investment you can make. They are anxious to buy and with 6-percent interest rates, they’re happy to buy. There’s very little inventory and the interest rates have stimulated the economy. Q: It’s all really that easy? A: No, of course not. I’m telling all of my clients, “Please don’t take out equity lines. Don’t make the mistake we might have made last time.” Let’s learn from our lessons. Let your house appreciate. Let it fluctuate. It’s like your stocks. They go up, they go down, you just forget about it. But with real estate you still get that tax break at the end of the year. Q: What are sales like? A: We keep appreciating between 11 and 12 percent every year, and we’re already there for this year. Our median prices have now hit an all-time high and that scares me. I caution sellers: Let’s not let these prices go to our heads. Let’s not let them go through the roof. Q: What are you afraid could happen? A: I’m afraid that we could overappreciate again like we did in the early ’90s. Obviously, what’s happening with interest rates is making the affordability factor just a little bit easier to swallow. There hadn’t been anything affordable out here, especially when the rates were up in the 9 (percent)s and 10 (percent)s, but as interest rates go down, a first-time buyer can buy. It scares the heck out of me though that what he’s buying is worth a quarter of a million dollars. Q: What happened in the early ’90s that might not be the case now? A: We had a national recession that we had to live through. We were hit hard, as was everybody else in the nation. You take all of California and we were hit just like the Bay Area and Orange County. They now are having a different predicament. They are ending up with so little inventory and their prices are so high that people who want to live where they work are incapable of purchasing. In Silicon Valley and San Francisco proper, there’s absolutely nothing for them to buy and, if they could, they put a bid on a property that’s $1 million and there are eight other offers. All that overbid process is an ugly business. That’s what happened in the San Francisco area and in Orange County. They’ve already plateaued, they’ve gone as far as they can go and it’s a scary spot. Q: What makes the situation so different in the San Fernando Valley? A: The main factor is affordability. This is where people want to purchase homes because they can get so much more for their money. They can get more land, more home. Out here in the Valley we’ve been so desirable for so long because we have areas comparable to the estates of Beverly Hills. We have our Bell Canyons and beautiful properties south of Ventura Boulevard, but you get a lot more for the money. For $3 million you get a lot of acreage, so much more than over the hill. We’re still very affordable. The Valley is a very big place. We have a lot more inventory. That in itself keeps the prices down. Q: What about reports that there is not as much activity at the lower end of the housing market as at the top? A: I don’t know what the factor is, but that is the indication we’ve been looking for that the market is going to slow down. We have a lot more inventory now in that lower end. We have a lot more building going on, for instance, in Sylmar, in that northeastern end and an awful lot more building going on in Santa Clarita. There are more and more people willing to drive up the 5 to Santa Clarita. I expect the market to slow down a bit, but it always tends to slow down traditionally as we get to October and November anyway. I hope that’s true. Q: Why do you want that? A: Because otherwise we end up in a frenzy, a price frenzy. Sometimes the market tends to become very unruly, as is evidenced by what’s going on in Northern California. I’d like to see property values remain calm here. I don’t want to see multiple offers. I want to see one buyer make a bid on a house and I’d rather not see the appreciation continue to be as out of control as it has been. Otherwise, we end up pricing ourselves out of the market. And if we do end up with a slowdown or a recession, which we’ve seen in the stock market, and if there are layoffs, that’s going to affect us.
