Housing Market Warming Up After 3-Year Slump : Real estate: Optimism returns to Southland with rising sales. Number of homes on market is down.

After three years of slumping sales and falling prices, there are growing signs that Southern California’s worst real estate downturn in more than a decade may be coming to an end.

Home sales have risen for four months, houses are selling faster and new homes are being built at the speediest clip in four years. And the spate of upbeat reports is infusing many homeowners, real estate agents and builders with renewed hope and optimism.

“We’re either at the very tail end of the slump or at the very start of a housing recovery,” said Frederick Cannon, Bank of America’s senior economist. “The market’s not going to come roaring back and we might hit a few bumps along the way, but most of the signs we see are positive.”

“People seem more confident about the economy and the future of the housing market, and they’re a lot more serious about buying than they were six months ago,” said Jon Douglas, a leading Southern California real estate broker.

Part of the reason is that the supply of homes for sale has dropped dramatically, giving sellers a much better chance at unloading their properties. The number of homes on the market in Los Angeles and Orange counties is down nearly 50% from peak levels of early last year.

Meanwhile, new home construction has picked up as owners of existing houses are finally able to sell their property and “move up” to more expensive homes. Building activity statewide is expected to surge 17% in 1993 compared to last year, according to a building industry research group.

Statewide sales of existing homes rose 14% in December compared to December, 1991, according to the California Assn. of Realtors. The increase pushed the monthly sales pace to its highest level in nearly a year. On Tuesday, the same trade group reported that sales for all of 1992 rose 0.6% from a year earlier, and the increases were stronger in the final months of the year.

No one can say with certainty that the hard times are over. Although homes sales have risen in most places, prices remain flat or continue to drop in some neighborhoods as anxious sellers cut their prices to make a quick sale. And there are fears that the upturn might not last as initial consumer optimism over a new Administration in Washington wanes and the perennial spring boost in homes sales runs its course.

But don’t tell that to Leona Dahlin, who recently put her modest Long Beach house up for sale. Expecting to wait weeks for the home to sell, she booked a flight to visit her son in suburban Washington because she didn’t want to hassle with the strangers trekking through her home.

Dahlin had barely begun unpacking when she got a long-distance call from her real estate agent. Not only had her home received an offer the first day it was put on the market, the bid was only $500 under her $185,500 asking price.

“I was stunned,” said Dahlin, a retired chemist who plans to close the sale this month. “I was expecting to wait for weeks or months to find a buyer. I just couldn’t believe that it sold in a single day.”

Real estate agents say they also are encouraged because more sellers finally are admitting that their property often is not worth as much as they thought--and, in many cases, not even as much as they paid for it. “Sellers are finally getting realistic about what their property is really worth,” said David Carden, a real estate agent in Long Beach.

This change in attitude is helping to break the logjam in Southern California home sales.

Consider Garry Tous, a dentist who works in Brea.

Before Tous recently tried to sell the Westside house owned by his mother, he toured every open house in the neighborhood to ensure that his asking price would be competitive. He then listed the two-bedroom, two-bath home for $339,000.

“I immediately got two offers, and a week later it sold it for $319,500,” Tous said. “Taking a 5% discount in this market isn’t bad, especially if you want to sell quickly.”

According to La Jolla-based Dataquick Real Estate Information Services, sales in the final three months of 1992 rose 5% from the fourth quarter of 1991. Dataquick’s statistics show that most of the increase occurred in neighborhoods where prices average less than $250,000.

But with homeowners in the $200,000-to-$250,000 range better able to sell their property, the move-up market--generally considered homes between $250,000 and $450,000--is also beginning to pick up steam.

“We’re even getting multiple offers on some of our homes in the $300,000 and $400,000 range,” said Westside real estate broker Fred Sands. “The strength in the entry-level market is trickling up to more expensive homes.”

Many builders are breaking ground on projects they have delayed for as long as a year.

Whitehawk Partnership, for example, halted construction on a development in Woodland Hills last summer in order to wait for the market to improve. Now it is hiring back subcontractors and ordering new materials to begin an additional seven homes costing at least $600,000 a piece.

“Seven homes might not seem like much, but it’s a commitment worth more than $4 million,” said Jim Oates, Whitehawk’s president. “We’re putting our guys back to work, and it’ll have a ripple effect on the entire local economy.”

For some, the recent pickup came too late. Brenda Hawkins put her Palmdale home on the market last summer for about $130,000 after taking a job in San Jose. The house sat vacant for six months before she accepted a $105,000 offer in December.

“I sold for about $20,000 less than I paid for the place a couple of years ago,” said Hawkins, a computer programmer. “I didn’t have any choice. If the bank foreclosed, it would’ve ruined my credit record.”

Indeed, many sellers who did not make deep cuts in their asking prices while the market continued to decline in 1991 and 1992 learned a costly lesson.

Albert Scholl, a retired marketing executive, agreed to sell a Studio City house that belonged to his late mother-in-law for about $400,000 last April. But the buyers pulled out after the spring riots, so the Scholls put the property back on the market.

The couple made a series of modest price reductions, but a probate judge would not allow them to cut the price deeply enough to keep pace with the neighborhood’s falling values. Making matters worse, the roof leaked in last month’s heavy rains, causing about $10,000 in damage.

The Scholls finally persuaded the judge that the value had dropped since a court-ordered appraisal last year. They hired a new agent a few weeks ago and sold the home the next day--for $270,000.

“We just wanted to cut our losses and get on with our lives,” Scholl said. “It was an episode that I’d like to forget.”