Home Listings Hit Record High : Property: These are trying, competitive times for sellers. Low prices and interest rates are appealing but many buyers still hesitate to make purchases.
To understand one reason why her two-bedroom condominium in North Hills isn’t selling, Marie Schmick needs only to look out her front door. There, on the parched lawn of the 25-unit building stands a row of five “For Sale” signs, each alike except for the one with a “Sold” marker emblazoned in red.
Schmick, a technician who was laid off two years ago from Rocketdyne, is keenly aware of the condo that was sold. “They had a better sales agent,” she grumbled, adding that she could wait no longer. “I’m going to change to that broker.”
For house sellers, these are trying and competitive times. Especially in the San Fernando Valley, where the inventory of available houses and condos have proliferated to a record high, causing increased rivalry among sellers and their agents.
For buyers, the competition among sellers and the weak demand have lowered housing prices for the first time in several years, and interest on home loans--which averaged 8.09% last week for 30-year fixed-rate mortgages--is at its lowest in two decades.
Yet many potential consumers, lacking confidence in the economy and in the security of their jobs, are holding back. Some complain that housing prices are still too high. And the bulging supply isn’t making things any easier.
“Oh, God, there are a lot of houses,” said Dana White, a North Hollywood landscape architect who has gone through 75 properties and three brokers in a yearlong search for a house. “It’s a lot more confusing . . . I’m really getting burnt out.”
At the end of June, there were 14,954 existing single-family houses and condos for sale in the Valley. That means about one out of every 20 homes in the Valley are on the block, according to figures from the Los Angeles Planning Department.
Listings typically rise in the summer as more families plan moves during their children’s vacation months. But this year, the inventory has climbed more than usual because of plunging sales.
From April to June, sales of existing single-family houses and condos dropped 24% from a year earlier, even though the average resale price of houses in June dropped 6%, to $282,800, from a year earlier, according to the San Fernando Valley Board of Realtors.
The average resale price of a condo in June was up 1% from a year ago, to $161,100. New-home sales, meanwhile, fell 37% in the second quarter compared with a year earlier, according to the Meyers Group, an Encino consulting firm.
“There is a real crisis of confidence with the buyers,” said Dale W. Fay, an owner of Century 21 Oak Tree in North Hollywood. Fay said the recent riots and the earthquakes have added to consumers’ jitters, although she and other industry executives said they’ve seen no mass exodus of residents, as some previously expected.
The Valley housing market hasn’t been completely lackluster. Real estate experts report that sales of lower-priced houses, particularly those in the northeast area of the Valley, are strong. And they say a greater part of their sales are with first-time buyers who--unlike homeowners wanting to trade up--don’t have to wait to sell their houses before closing deals.
“There are some phenomenal deals out there,” especially for first-time buyers, said Marianne Voragen, a broker-owner of Re/Max West Realty in Woodland Hills.
Newlyweds Darren and Nancy Taylor couldn’t agree more. The Taylors, who are both in their 30s and employed, recently settled on a 1,800-square-foot, three-bedroom house in Van Nuys for $240,000, which they financed with a variable-rate loan bearing an initial interest rate of 4.5%.
The house, which has a pool and a two-car garage, was originally listed for $270,000. Despite an eight-month search that took them to 150 houses, Nancy Taylor said she couldn’t be happier. “We just love this home,” she said.
But for every couple like the Taylors, experts say, there are many more who are failing to qualify for loans because banks have tightened their requirements, or who have decided to wait and see if the housing prices and mortgage rates will continue to drop.
“Everybody’s expecting one more drop in the rate,” said Jerry Brower, a vice president at EFM Mortgage Bankers, a lender and loan broker in Burbank. “But I just don’t think that’s going to happen.”
Brian Cromwell, an economist at the Federal Reserve Bank in San Francisco who studies the housing market in California, said that waiting for the rate to drop may be risky. “They’re as likely to be burned by the rate going up as they’re likely to gain from it going down,” he said.
But many potential house buyers are also retreating, they say, because they believe the house prices are still too high. Many in the industry agree.
“They remember what their neighbor sold their home for three years ago, and they want the same price today,” said Chuck Lamb, president of the California Assn. of Realtors and the owner of Century 21 Lamb Realtors in Northridge.
Lamb said sales at his office are up 35% from a year ago because “we’ve worked harder at making sellers aware of the realities of the market.”
Wayne Scott, owner of American Real Estate Appraisal in Canoga Park, thinks that the average house or condo for sale is listed about 7% above what it’s worth.
“And we’re talking about the realistic listings,” Scott said.
Indeed, the Valley realty board said that only 7.5% of the houses sold in June were sold at or above the listing price. In the same period three years ago, that figure was close to 20%.
“A lot of realtors are declining listings when they think the seller is not serious,” said Jim Link, executive vice president of the board, California’s largest with 8,000 members.
Link said he didn’t think the inventory would climb much higher anytime soon. But he also said it was unlikely that it would drop either. Neil Cooper, a broker based in Valley Village, put it this way: “I think it’s going to be a long summer.”
VALLEY HOUSING ACTIVITY
Sales of existing single-family houses and condominiums in the San Fernando Valley dropped sharply in the second quarter, resulting in a record inventory of properties. Housing prices have also declined since early this year, but not enough, some experts say, to draw more buyers into the market.
Inventory, June 1992: 14,954
Average Resale Price:
Houses, June 1992: $282,800
Condos, June 1992: $161,100
Source: San Fernando Valley Board of Realtors
