Quake Upends Supply and Demand in Real Estate : Housing: With 30,000 displaced, new renters abound. While some home shoppers retreat, opportunists rush in.
The Jan. 17 earthquake that turned so many lives upside-down has also upended supply and demand in the Los Angeles-area housing market, bringing unlikely relief to many long-suffering property owners but only renewed grief to others.
Homeowners and landlords whose wallets have been thinning for months because they were not able to sell their vacant houses or rent empty apartments say that they are now besieged by tenants displaced by the temblor.
Meanwhile, buyers who want to avoid Northridge and other communities at the quake’s epicenter are spilling over into surrounding areas, creating a mini-sales boom from Woodland Hills to Agoura on the west and across the San Gabriel Valley in the east, real estate agents say.
Still, many home shoppers have retreated to the sidelines while the ground continues to shake from aftershocks. Hundreds of home sales are in limbo because lenders are insisting that properties be reinspected for damage.
Yet some opportunists have rushed in, hoping to pick up a bargain in a housing market that only recently had emerged from a prolonged and severe recession. Harried salespeople and lenders are working overtime, helping the new clients while trying to salvage the deals already in escrow.
“It’s like trying to navigate through the Bermuda Triangle,” said Jamie Ramstead, a Northridge real estate agent trying to save the six sales he has in escrow while also repairing $60,000 in damage to his home. “Most of us have never been through something like this before.”
The quake rendered more than 15,000 homes and apartments unlivable, throwing more than 30,000 people onto streets from Santa Monica to Simi Valley, according to city agencies and disaster relief officials.
With so many families looking for new places to live, sellers who have lost thousands of dollars while their vacant homes sat unsold in a depressed market have been flooded with calls from prospective renters.
Linda Kennedy has been making the $950-a-month mortgage payment on her home in Canoga Park that she vacated in July after finding a new job in Oregon. The house sustained little damage from the quake, so she flew back to Los Angeles last week and leased it to a displaced Northridge family for $1,850 a month.
“I figure I’ll recoup what I’ve lost by the summer, and then I’ll be making good money because the family signed a one-year lease,” said Kennedy, who reviews contracts for the federal government.
“I feel sorry for all those people who lost their homes, but it’s nice to finally make something off this house. The last six months have bled me dry.”
The quake has also been a boon for sellers in many San Fernando Valley communities that were spared the most serious damage. Thus, some would-be buyers are steering clear of hard-hit Northridge and Reseda in favor of nearby Woodland Hills and north into southern Ventura County.
Jerry Bolin, sales manager of the Coldwell Banker real estate office in Woodland Hills, said his agents sold half a dozen properties over the weekend--even though many buyers stayed home to watch the Super Bowl.
“Before the quake, we’d be happy with just three or four sales,” Bolin said.
Although many put their home-buying plans on ice after the quake hit, some new buyers have moved in to replace them.
Harriet Lipson, vice president of an executive search firm, lost her $535-a-month rent-controlled Santa Monica apartment in the quake. Because it would cost her twice that for a comparable apartment, she wants to buy a condominium, hoping her mortgage interest deductions will keep her housing expenses at a minimum.
“There are a lot of good deals on the Westside right now,” Lipson said. As a bonus, she added, “it’s a little easier to tell which buildings are well-built. Some of them have just fallen apart.”
Still, not all of those new buyers are being welcomed by real estate agents or their sellers.
Carolyn Lamb, co-owner of Century 21 Lamb Realty in Northridge, said she and her staff have gotten several calls from investors hoping to pick up homes at a tiny fraction of their normal prices.
“We’ve gotten our share of bottom-feeders, but they’re not having much success,” said Lamb, whose home sustained major damage during the quake. “The law says that we have to present their offers to our sellers, but there’s nothing that says we have to like it.”
Many buyers and sellers who were waiting for escrow to close when the quake hit are in limbo. About 1,000 deals were pending in the San Fernando Valley when the earthquake struck, according to the local realtors association. A few hundred were in escrow in Santa Monica and adjacent communities.
Many lenders are requiring that every house they had agreed to finance in the county be reinspected for damage. As a result, some appraisers and inspectors have been busy taking a second look at properties more than 75 miles from the epicenter.
“The house I’m buying in Sherman Oaks didn’t get hurt a bit, but I can’t close the deal because my (appraiser) is busy looking at houses down in Long Beach,” said Nick Smith, who drives a delivery truck. “The whole thing is stupid.”
An informal poll of about a dozen real estate offices in the San Fernando Valley and on the Westside found that about 10% of all purchases in escrow at the time of the earthquake have been canceled.
“Most of our customers are going through with their sales, although we’ve had to renegotiate some of the terms,” Lamb said. “It takes a little extra work for us and might add a few days of delays, but nobody has called up in a panic and said they want their money back.”
Those words are of little comfort to Rhoark Rollband in Encino.
Rollband had been trying to sell his condominium for nearly a year before the earthquake hit, and had reduced the asking price for his two-bedroom loft to $124,000 from $129,000. The local housing market was showing signs of picking up, and he was confident the home would sell soon.
Although Rollband’s unit weathered the quake, the temblor damaged several other buildings at the sprawling complex on White Oak Avenue and knocked out gas service for nearly two weeks.
Now he has slashed his price again--this time to $109,000--and is willing to take even less to make a quick sale.
“Meet my price, and I’ll even throw in my furniture,” said Rollband, a salesman who says the quake persuaded him that it is time to move to Denver. “I just want to cut my losses and get out of L.A. as fast as I can.”
