Real Estate Showing Signs of Snapping Out of Slump : Economy: From coast to coast, brokers report upturn in home sales. It could spur recovery from recession.

Los Angeles lawyer Bill McCallister sold his Hollywood home last October, tucked away the proceeds in a bank account and sat back to see how low the housing market would go. Last month, when he found a Mt. Washington home whose price had been slashed by $60,000, McCallister decided it was time to move. He snapped up the house for $320,000.

“I thought about whether I should sit there and watch the market sink some more . . . . But I felt it could only go (down) so far,” McCallister said.

A growing number of Americans have been following the same reasoning in recent weeks. Heartened by victory in the Persian Gulf War, low mortgage rates and eager sellers, they have begun to venture back into what had been a nearly moribund real estate market.

From Massachusetts to California, real estate brokers are reporting a resurgence of activity. At first, they mainly saw stepped-up browsing at open houses, but now they say the visits are leading to sales. “People are no longer kicking the tires,” said James L. Pugash, a housing analyst at San Francisco-based Montgomery Securities.

Many economists now hope that a housing rebound will become the key engine of a broader economic recovery later this year as the construction industry picks up and new home buyers shop for appliances, furniture and other big ticket items.

“The real estate market is showing strong signs of coming back,” said Joe Mazza, a senior vice president at First American Title Co. of Los Angeles. The firm, one of the nation’s largest title searchers, saw its Los Angeles business climb 12% last month, after suffering an 11% decline for the 12 months ending December, 1990.

Experts agree that it is still too early to declare an end to the slump, in which home sales in January hit their lowest level since the 1982 recession. They caution that home buying always improves as spring nears and that the upsurge is mainly at the low end of the market. Others note that the commercial real estate business continues to flounder.

Government figures on February home sales will not be released until next week, but many in the real estate industry were encouraged by the report this week showing construction of new apartments and houses jumping 16.4% in February.

Meanwhile, stories abound of people buying homes--and cutting good deals.

“I originally didn’t plan on looking for a house, but, with lower interest rates and lower prices, I decided to buy,” said Mark Schneider, a Los Angeles accountant who last week paid $140,000 for a condominium in West Hills near Canoga Park. “I think the market has bottomed out.”

Another buyer, Miriam Preissel, a Los Angeles film-editing assistant, spent months casually looking while waiting for home prices to reach fire-sale levels. “I thought the market was going to get softer and softer; I thought I had plenty of time.”

But, in December, when someone topped a low-ball offer she had made on one house, Preissel said, she “decided I wasn’t going to dally about.” Preissel still got a good deal--a two-bedroom, one-bath home for under $200,000 in Van Nuys.

Many buyers have been motivated by low mortgage rates. Schneider, for example, financed the purchase of his condo with a 30-year fixed mortgage with an annual interest rate of 9 1/4%. This compares with fixed rates of as much as 11% that were common six months ago. Some adjustable rate mortgages have dropped below 8%, according to Mortgage News Co., a Santa Ana publishing firm that tracks the rates of 150 lenders. And, although rates have begun to inch back up in recent weeks, they still remain at their lowest levels since the spring of 1987.

And, despite tight credit conditions for commercial developers and other corporate borrowers, some banks and other financial institutions are stepping up their residential lending. Qualified buyers--especially those able to make a healthy down payment--are finding they can shop around for the best loan package.

Consumer response to the improved market has astonished some builders and real estate agents who have been skeptical about the strength of the upturn.

Bruce Karatz, president of Los Angeles-based Kaufman & Broad Home Corp. who cautioned against becoming “over excited” about the recent upswing, said he nevertheless was surprised when prospective buyers formed block-long lines last month to purchase houses in a new Pomona community called California Crossings. Since the development opened on Feb. 1, about 80 of its 119 single-family homes--priced between $139,000 and $179,000--have been sold.

At Prudential California Realty, which has 75 offices in the state, home sales rose 48% in January and February, compared to the same period a year ago. The company said homes in the $200,000 to $300,000 range were selling the fastest, followed by those in the $400,000 to $500,000 range.

At the Santa Monica office of Fred Sands Realty, 30 homes entered escrow in February. That compares to 24 escrows in January, 15 in December and 19 in February, 1990. Sands’ Los Feliz office also had a big jump in business in February, with 51 homes entering escrow, compared to 39 in February of 1990.

In Orange County, 287 new houses were sold during January and February in the planned community of Rancho Santa Margarita, where homes are priced between $105,000 and $400,000, according to the developer. That was a 20% increase over 1990, officials say.

Activity is also picking up in the Northeast and Middle Atlantic states, where home prices have been depressed longer and more severely than in California.

In Massachusetts, 25% more homes went into escrow during the first two months of this year, compared to January and February of 1990, according to the Massachusetts Assn. of Realtors. The state’s housing market is now growing at “a very healthy pace,” said Richard DeWolf, a realtor who operates 26 sales offices in the state.

In suburban Washington, D.C., sales at Long & Foster Real Estate Inc.--one of the nation’s largest independent real estate firms--jumped to 3,320 units in February from January’s 2,374 units. Meanwhile, Alan Yassky, president of Rockland Realty in Rockland County, New York, said his February sales were 30% higher than a year ago.

Still, some economists, builders and other experts are concerned about the staying power of the recovery in the real estate market. They point out that much of the recent activity has been among mainly first-time buyers and that more affluent Americans are not yet trading up to pricier homes.

In addition, these experts say, other key economic indicators are not falling in lock-step behind the housing upturn. The nation’s unemployment rate, for example, rose to 6.5% in February from 6.2% the month before, signaling that home buying remains out of reach for many Americans.

Massachusetts’ DeWolf, for one, is withholding final judgment about a turnaround until more complete evidence is in. “We may simply be absorbing the demand that we (should) have had in the fourth quarter of 1990,” DeWolf said. “The question is whether we will see a continuation of this (higher) level of sales activity.”

Despite such skepticism, there is no denying that, for many in the industry, optimism is on the rise. Take Tom Dufore, the contractor who built McCallister’s Mt. Washington home. He is so confident the market will stay strong that he plans to build another home nearby to put up for sale soon.

“I know I can sell it,” Dufore said. “The demand is there.”