Bottom Line: Housing Market May Be Mending : Real Estate: Despite a three-year slump, experts say prices are stabilizing, especially for homes under $500,000.
What do Westsiders want to know even more than who’s in Heidi Fleiss’ little black book?
They want to know if the local real estate market has bottomed out yet.
The answer is yes, say at least some of the people active in Westside real estate. It’s news that can’t come too soon for people who can’t sell their houses for what’s left on their mortgages.
Ron Wynn is one of the optimists. A Westwood-based vice president with the Prudential California Realty, Wynn said he saw a dramatic change in the market around Aug. 1.
The local real estate slump is now in its third year, and until recently, Wynn said, “I’ve been busy, but it’s been a struggle. Then suddenly, in the last three weeks, I’ve had multiple offers and full-price sales.”
Wynn said he recently sold three houses in West Los Angeles at their asking prices, which were under $500,000. “Three weeks ago I thought prices would go down another 5% to 7%, but now I’m not so sure.”
Banker John Miller also thinks the tide is turning.
Senior vice president of the mortgage division at Brentwood Bank of California, Miller speculates that the current buyers’ market could become neutral as early as the end of this year. Miller has his own measure for the health of the real estate market. It’s the amount of money in the bank’s “pipeline”--the value of residential loans currently being processed.
In January the bank was processing 100 loans worth about $21.6 million. It is now processing 350 loans worth more than $77 million, he said.
Houses in the $250,000-to-$350,000 range are what’s moving, according to Miller. “When you get above $650,000, it’s a little slower.”
Miller said the Westside seems to be much closer to recovery than such still seriously depressed areas as Lancaster-Palmdale and the Inland Empire. The western San Fernando Valley and eastern part of Ventura County are also strong.
Miller is also encouraged by the increase in new-purchase loans. As recently as January of this year, he said, 80% of his business was refinancing existing loans. That figure has dropped to about 60%.
Erny Pinckert also thinks the market has bottomed out--at least at the low end, which continues to be heart-stoppingly high by Iowa standards.
Another vice president with Prudential California Realty, Pinckert described the current Westside market this way. “Three-hundred thousand and under has bottomed out. From $300,000 to $500,000, it’s firming up. From $500,000 to $1 million it’s still loose, and from $1 million up, it’s spotty.”
Pinckert doesn’t think the market will fully recover until more people have enough equity to trade up. But he doesn’t think the slump has been a bad thing. He refers to the dive in Southern California housing prices, which some put at 25% since the 1989-90 peak, as a desirable correction in the market that will allow values to begin to grow again more in sync with local salaries. The real estate situation isn’t “getting bad,” he said. “It’s just getting real.”
Although Westsiders, especially those who bought at the apex, now worry about shrinking equity the way they once worried about cellulite, a growing number are taking advantage of depressed prices and record low interest rates to buy the newly affordable home of their dreams.
Donna and Michael Bray recently sold their Rancho Park house for “$400,000-plus” and bought in Westwood for “between $550,000 and $600,000,” she said. As Donna Bray, who works for Great Western Investment Management, explained, they had purchased the Rancho Park house in 1980 for $227,000 and had accumulated substantial equity despite the recent fall in property values. It sold in three months, less time than she had anticipated.
Great Western has an employee loan program that allowed the Brays to get a mortgage at even less than the going rate. Their new house, a two-story original Spanish-style, has everything they wanted, including a small yard.
Bray said she isn’t wasting time fretting about whether they bought at the absolute bottom of the market. “If prices go down a little bit, I’m not worried because we’re not moving,” she said.
Recovery, if that indeed is what is happening, is not happening at the same pace in every community. Wynn said the market is especially brisk for entry-level houses in Mar Vista Hill and Westside Village, adjacent to Rancho Park. And because prices have fallen dramatically in recent years, more and more clients are able to afford Rancho Park and Westwood. Dozens of homes have sold for $290,000 to $360,000 in these two prime areas, Wynn said. “We’re talking small homes, say, two bedrooms, 1,200 square feet, but we’re also talking about neighborhoods that are delightful.”
One unforeseen consequence of the real estate slump has been that Prudential California Realty has snapped up a number of independent realty firms, some of which were badly battered by the recession. Since last year, the industry giant has acquired Wynn’s firm, Ron Wynn Realty West, along with Petrick & Associates in Pacific Palisades, Norton Realtors in Brentwood, Kent Realtors in Marina del Rey and Marler & Associates in Palos Verdes.
George Rathman, chief executive officer of Prudential California Realty, said that hard times for local real estate agents had presented an ideal buying opportunity for his larger, better-capitalized company. “Our strategy is to gain market share now and prepare for when the market gets better,” he said.
Each of the recent acquisitions has allowed Prudential to build on existing strength, he said. Buying Kent has also given the company a presence in Westchester, a less pricey area than the adjacent Marina but one that should recover faster, since, as Rathman pointed out, “the upper end has been hit harder.”
Rathman is convinced that the Westside is a good long-term investment, whether you’re a buyer of houses or realty firms. “In the long run, Westside real estate will definitely be valued at more than it is today.”
Westside House Sales
Here is a look at the number of single-family houses sold in selected areas of the Westside from May through July this year compared with the same three months in 1992, and the median price for each area.
Across the board, the median price for 1993 was below that of 1992. The drop could reflect an increased percentage of smaller, cheaper houses in the 1993 sales mix, but it also probably indicates a decline in overall property values.
Area ’92 sales ’93 sales ’92 median ’93 median Beverly Hills 155 170 $938,000 $850,000 Culver City 50 44 $253,000 $239,000 Hollywood 395 365 $332,000 $292,000 Malibu 43 40 $701,000 $664,000 Pacific Palisades 68 83 $634,000 $589,000 Santa Monica 298 309 $420,000 $357,000 Venice 39 35 $285,000 $252,000
Area % price change Beverly Hills -9.4% Culver City -5.5% Hollywood -12.0% Malibu -5.3% Pacific Palisades -7.1% Santa Monica -15.0% Venice -11.6%
Source: Dataquick Information Systems
