When Bill and Barbara Harsted put their three-bedroom Norwalk house on the market last month, they expected it would go in a snap. After all, the house was well-kept and affordably priced, in a Southern California market where bidding wars on homes are not uncommon.
     Then came the reality check. The couple, already in escrow on a new home in nearby La Mirada, sweated it out for a couple of weeks while their 1,150-square-foot house created barely a ripple on the market. It finally sold for close to the asking price of $179,000, three weeks after they listed it, and after the Harsted's compromised with the buyers.
     "We lost a lot of sleep over selling this house," Bill Harsted said. "I thought, 'What happened?   Did we make someone mad?' "
     Real estate experts say that home buyers aren't mad; they're just more cautious right now, when interest rates have settled into the 8% range and many reasonably priced homes have been sold. There is, they say, some cooling even in a still-hot market.
     "The frenzy has quieted down," said Doug Perry, first vice president of the consumer markets division at Countrywide, one of the nation's largest lenders. "Buyers are more conservative. The buying process is taking longer."
     It took the Harsteds about four months to find their new home, not so much because they were cautious but because several of the houses they wanted to buy were sold before they had the chance to bid on them.
     "It's a dog-eat-dog market out there," said Bill Harsted. "We found it quite frustrating."
     The Harsteds' experience typifies the state of real estate in Southern California as the summer selling season heads into fall. Realtors from Ventura to Riverside report that although sales of houses and condos are still brisk--multiple offers are not uncommon in some areas--buyers also are showing some reluctance to jump into the market when prices are so high and the inventory is so low.
     "A lot of buyers think we're at the peak right now and are afraid they'll lose money in the long run," said Yvonne Chien of Re/Max Premiere Properties in San Marino. "They think, 'If I buy now, will I hate myself two years from now?' "
     In Los Angeles County, the median price of existing homes rose 8.2% to $212,000 in June, up from $195,000 a year ago, according to figures supplied by DataQuick Information Systems of La Jolla. In Orange County, the median price surged 11.3% to a record-high $295,000.
     "We have the lowest inventory I've ever seen," said Michael Dreyfus, a Prudential California Realty agent in Corona del Mar. "With so few houses on the market, I've been expecting people to be frenzied about buying a home. But they're not."

     A Desire to Sell, Limitations to Buy
     Contributing to the low-inventory problem is the reluctance of lower-end homeowners to sell their houses, out of fear they won't find anything affordable in the move-up market.
     "I have clients who really, really want to sell, but they can't buy," said Sonny Fox, an agent with Coldwell Banker-Jon Douglas in Encino. "They keep thinking it'll get better, but it's not, really."
     Don't even mention "affordable" and "Westside" in the same breath, warned Brentwood Coldwell Banker agent Suzanne Peterson. Although the sales pace has slowed somewhat in Santa Monica, Pacific Palisades and Brentwood, Peterson said, multiple offers on well-priced homes are still commonplace, and tear-downs in the area north of Montana Avenue in Santa Monica are going for $800,000.
     First-time Southland buyers have been hit the hardest, though, Realtors say.
     In Los Angeles County, the affordability index, which measures the percentage of households able to afford the median home price, fell to 39% in June, an 11.4% drop over the same period a year ago. Ventura County posted the greatest drop in affordability to 25%, a decline of 43% since last June.
     Longtime apartment dwellers Steve Kesel, a 33-year-old teacher, and Phil Weir, 33, a speech therapist, despaired of finding an affordable home in Los Angeles after they learned that their budget of $190,000 would get them only an 800-square-foot cottage in the Silver Lake district, an area they desired and believed was still within reach.

     Clients Encouraged to Expand Horizons
     Donna Schwalm, their Encino Fred Sands real estate agent, encouraged them to expand their horizons. She introduced the reluctant duo to the mid-Wilshire district of Los Angeles, bordering Koreatown, where beautiful homes from old Hollywood are tucked amid quaint courtyards and sculpted gardens.