Washington Mutual Inc.'s buildup in California over the past two years couldn't have come at a better time.

Revised data on the growth of jobs in California last year shows that the state's economy in 1997 was even stronger than had been thought. That's good news for California's housing market, where prices statewide increased last year for the first time since 1991.

The state added almost half a million nonfarm, payroll jobs last year- about 100,000 more than estimated- in services, wholesale and retail trade, finance, insurance, and real estate.

The revival has started to take hold in the southern part of the state, where Washington Mutual is expected have the No. 1 share of the loan origination market once its latest deal, the $9.9 billion buyout of H.F. Ahmanson & Co., is completed.

California's recovery has been slowest in the southern counties, but last year, even these counties picked up steam-in the form of jobs and population.

The average growth in nonfarm payroll employment was 4.4% in the San Francisco Bay area, 3.1% in Southern California, and 4% in the Central Coast counties.

The jobs gap between the north and south is closing, says economist G.U. Krueger of the California Association of Realtors. For one thing, northern counties have close to full employment. Smaller companies, in particular, are migrating to the South in search of workers and cheaper housing, he says.

Lenders are boosting their presence in the once-moribund southern counties, but none more dramatically than Washington Mutual. The Seattle- based thrift had purchased the other two largest Los Angeles-area thrifts, American Savings Bank and Great Western Financial, in 1996 and 1997, respectively.

With the Ahmanson deal, Wamu's Southern California mortgage origination would climb from $4.16 billion, to $5.9 billion, based on figures for last year compiled by Experian. The thrift's market share would jump from 5.37%, to 7.44%.

There was one other important sign of California's turnaround last year. The population grew twice as fast last year as it did each year from 1994 to 1996.

The California Department of Finance reported that the state's population was 32.9 million in July 1997, an increase of 574,000, or 1.8%, from a year earlier.

In a recent report, Bank of America economist Howard L. Roth says Los Angeles, San Diego, and Orange counties had the largest numeric gains, with greatest growth due to migration from other parts of the state or the nation. By contrast, a net 1.25 million people left California from 1991 to 1996, Mr. Roth said.

As jobs and people go, so go home prices. "With the outflow stanched, California residential real estate should improve nicely," Mr. Roth writes. "Above-average home price increases may well be in store for the next few years as residential building plans, while increasing, appear not to be keeping up with household formations."

As job growth is more evenly distributed across the state, the gap between home prices in the north and south also are likely to close, Mr. Krueger says.

It wasn't that long ago that median home prices were roughly even in the seven-county San Francisco Bay area and in much less densely populated Orange County to the south. In 1990, median prices in Orange County were $242,360, compared with $259,000 in the bay area-a difference of about $17,000.

By 1996, the gap had grown to more than $53,000. The median house in Orange County was valued at $213,370, compared with $266,660 in the bay area.

Last year the difference widened to roughly $63,000. The median home value was $229,840 in Orange County, compared with $292,610 in the bay area.

There are some risks to Mr. Krueger's cheery predictions of continued recovery in California's housing markets. They can be summed up in one word-Asia.

"The risks are either that the Asian crisis will be bigger than everyone is thinking or that it will be smaller," Mr. Krueger said.

If Asia's recession doesn't curtail U.S. growth enough, the Federal Reserve Board will probably accomplish that itself by raising interest rates, which is sure to slow housing markets nationwide, he said.

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