A Growing Sense of Job Security Spurs Low-Range Sales

Is the housing market improving?

That’s the question that I’m most frequently asked, and the truth is that nobody really knows.

However, the consensus among San Fernando Valley and Ventura County real estate agents is that sales are doing decently in those homes priced below $250,000, while activity in higher-priced markets continues to be pretty slow.

“We’re seeing multiple offers on some properties under $250,000,” said Gordon Carey, branch sales manager at Coldwell Banker Residential Real Estate in Woodland Hills. “The attitude of the buying public has improved. We have more buyers coming in and most of those people feel confident about their current employment.”

This isn’t the whole picture, however. While people who are buying feel secure about their jobs, there are lots more people who aren’t buying and who don’t feel very secure. And, Carey conceded, there are 7,000 properties for sale in the West Valley and Agoura Hills. Only about 200 of those properties are selling each month. “About 19 out of 20 homes won’t sell in the initial listing period,” Carey said.

“If you’re a seller who wants to sell, you need to face reality. You keep lowering the price until you meet the market.” Low interest rates alone aren’t enough to get homes sold. “People have gotten used to the low interest rates so it’s not that big a motivating factor,” Carey said.

If interest rates go up, he predicted, the slight recovery that is under way could get squelched. Traditionally, however, just as interest rates begin to go up, many undecided buyers jump into the market to avoid even further increases in interest rates.

Overall, Carey expects sales activity to be up by about 10% this year, compared to 1992. As for properties in the $150,000 to $200,000 price range, he says, those prices may increase by about 3% to 5%.

“That’s where the activity is,” he said. “The upper-level properties aren’t performing as we’d like,” Carey said. “I don’t see any movement in homes over $500,000. Prices will stay flat or move down a bit.”

It’s a buyer’s market, Carey said, so “if you don’t have to sell your home, don’t sell it. If you have to move, consider leasing out your current home until the market gets better.” Carey bought his own home in Calabasas in March, 1989, just before prices took a nose-dive.

“I made the person who I bought my house from a very wealthy person,” Carey quipped, but he says he’s optimistic about the future.

“The very high end of the market and anything under $225,000 seems to be improving,” said Jim Chutuk, vice president and branch manager at Prudential California Realty in Ventura.

Sales in the $175,000 to $210,000 range are particularly strong, he said, as lower interest rates have boosted the so-called affordability index. In 1989, only about 8% of local residents could afford to buy the average home in Ventura. Now, thanks to lower prices and interest rates, Chutuk said, the number is closer to 40%.

“My opinion is that prices will be up 5% to 7% this time next year for Ventura,” Chutuk said. But, “everything depends on the economy.”

The market for homes in Ventura was good in November and December, Chutuk recalled. January was slower than he expected, but things are slowly picking up again. The Ventura Board of Realtors reported about 87 homes sold in February, while the current inventory of unsold homes is at about 1,310 listings. At February’s rate, it would take 15 months just to sell all the homes now being offered for sale.

Outlying areas such as Oxnard and Camarillo have not been selling very well, Chutuk observed. There may be lots of reasons for this, he said, but the biggest one is that there aren’t all that many homes there in the $175,000 to $200,000 range, which seem to attract most of today’s buyers.

Despite the market’s problems, Chutuk said, buyers are getting the benefit of lower prices and interest rates. And sellers who want to move up to a more expensive home can also benefit as buyers.

“I don’t see prices increasing at all,” said Claudine Allen, an agent with RE/MAX Realtors of Valencia. And, she said, if interest rates go up, prices may even come down some more. Homes in the low-$200,000 range are selling well, she said. Homes that are more expensive are suffering, however, from a “sluggish” market. “The major portion of buyers in the upper price range are professionals who have been losing their jobs,” she said. “There’s a real sense of instability in that market.” Homes that were $500,000 may now be selling for $400,000. And, some homes that were $560,000 now are selling for $370,000 to $400,000.

Valencia home prices are basically holding their own, Allen said. The hardest-hit areas she knows of are Palmdale and Lancaster. “A lot of people are still considering whether to walk away from their homes. You see whole subdivisions that have gone down,” Allen said. “That market is incredibly depressed and builders are offering big discounts.”

All this is making lenders very stringent.

“I see them becoming more cautious than ever in the way they are scrutinizing buyers,” Allen said. “There is a substantial portion of the market that is foreclosure property. People overpaid and over-encumbered and now they need to sell. Three years ago, there were people buying who had no business buying. Now the lenders are making sure that buyers are really qualified.”

There are some bright spots, Allen said. People who two years ago could only qualify for a $150,000 home, thanks to lower mortgage interest rates, may now be able to qualify for one that’s worth $180,000.

“Three years ago, first-time home buyers couldn’t even get into the market,” Allen said. “Now at least there’s a window of opportunity.”