Northridge Tract Epitomizes Sickly Home Sales Market
“I think the market stinks,” complained Northridge home seller Judy Holden.
She and her husband put their four-bedroom Mediterranean-style home on the market at the beginning of this year for $649,000. The very same home is now in escrow and will actually sell for $460,000. Making matters worse is the fact that the Holdens paid $500,000 for their home in 1988 and then invested another $100,000 in remodeling.
“We’re taking quite a loss,” Judy Holden said. “You bite the bullet.”
The Holdens are at least in escrow and may actually be lucky compared to some of their neighbors in the comfortable Northridge enclave of Devonshire Highland Estates, between Plummer Street on the south, Lassen Street on the north, Corbin Avenue on the west and Tampa Avenue on the east. I decided to explore this community of about 350 homes to get a better feel for the Valley’s sickly real estate market. What I found was disconcerting.
Just across the street from the Holdens is another four-bedroom home that’s in escrow. It was listed in mid-1991 for $649,000. In May of 1992 the asking price slipped to $549,000. By June, the price was $499,000. In August it was down to $445,000. If all goes according to plan, escrow will close at the end of November for about $20,000 less than the last asking price.
“There is an extreme lack of buyers out there,” observed David Morris, an agent at Fred Sands Realtors in Sherman Oaks, who is handling the property. “I was extremely lucky in procuring a buyer.” There are more than a dozen for-sale signs in the neighborhood.
A few years ago, Morris said, the same home would have easily sold for about $700,000. But those days are gone.
“Sellers realize they’re in a market that’s dropping. The longer they wait, the lower the price they’ll get,” Morris said. “There doesn’t seem to be a light at the end of the tunnel.”
Not everybody is quite so negative--or at least they don’t admit to it publicly.
“We’ve seen a significant turnaround in the last 30 days,” countered Syd Leibovitch, owner of Paramount Properties Inc. in Northridge. “The great deals are gone. Those buyers who haven’t bought yet have missed the boat.”
Leibovitch conceded that prices in the neighborhood are down about 8% to 10% this year, on top of a 10% to 15% price erosion last year. But “I definitely see a turnaround,” he insisted. “I’m telling you this prediction is definitely right.” It’s worth noting that Leibovitch says he’s “the most successful broker in the area” and, he added, “my people get more money for their homes.” That seems like quite a reputation to live up to.
Homes within Devonshire Highland Estates that Leibovitch reports are in escrow include one on Citronia Street that listed for $499,000 and sold in less than a month for about $475,000. Another home on Tunney Avenue, he said, was reduced from $399,000 to $350,000 to consummate a deal. All this proves that “the desperation is gone,” Leibovitch said, and business is picking up.
Brokers Leibovitch and Morris have divergent views about the local market. The truth--if there is really such a thing--is probably somewhere in the middle.
“I don’t think anybody’s in a position to know where things are going,” said Ken Davis, a broker at R. R. Gable Inc. in Northridge. The future is guesswork, he said, so “you have to deal with reality,” and that includes accepting lower prices.
Two years ago when the residential real estate market started hurting, Davis recalled, there were fewer sales, but prices were pretty much stable. Since then, he said, “we’ve seen quite a deterioration in prices.” Davis has a home listed on Citronia Street that’s facing a trustee sale by a lender that has initiated foreclosure.
The foreclosure process takes 90 days before it goes into effect, so Davis still has a chance to sell the property. However, that home is empty, with weeds sprouting and the water and electricity cut off.
“I’ve been cutting the grass myself,” Davis said, and it looks like time is running out for the current owners.
The home was for sale about a year ago for $475,000. The current asking price is $399,000. Davis had an offer recently, but “it wasn’t realistic,” he said. Why? The owners, although they bought the house in the 1970s, kept taking out loans and their equity in the property has been wiped out. The “unrealistic” offer Davis mentioned was less than the current debt on the home.
Another home that has had its troubles is at the end of a quiet cul-de-sac, on Needles Street. The house was sold in 1988 for $545,000. When the owners couldn’t keep up with the payments, the lender ended up taking the property back. To make the home more salable, the lender has installed new doors, fixtures and appliances in this four-bedroom home. And the price has recently been reduced to $399,000.
Sellers who bought their homes in the late 1980s and who now need to sell because of a job loss or an out-of-town move are the hardest hit by the San Fernando Valley’s housing price free fall. For some first-time home buyers it’s a bonanza, and for homeowners who want to move up to a better home, it’s a wash--assuming they can sell their current residence.
For the Holdens, it is unpleasant to sell their 3,000-square-foot home at a loss. But they have moved around before, and now they are also managing to buy a bigger home in the same Northridge neighborhood with a tennis court for $550,000. True, they are losing about $140,000 on their current house, but the Holdens reason that they are getting another home worth, in healthy economic times, about $800,000. What they lose on one house, they are gaining in the other. And Judy Holden plans to spend some of that price reduction on renovating and decorating the new house.
“Anybody who’s buying is getting a good buy now,” said the Holdens’ broker, Marietta Hayes of Apple Realty in Encino. “I see prices stabilizing in about a year and then slowly getting better,” she said. But for now, “people are in a wait-and-see mode.”
