Cover Story : Real Estate Gets a Reality Check : As home prices continue their downward spiral, buyers are having the last laugh.

Funny, how the real estate tables have turned.

Roughly five years after the days of home-sale madness, the sweet deals are still flying--but this time with a buyer’s vengeance.

This is the story of how the Hesters snared their dream home in Sierra Madre, how Charlotte Kramer bought her first house in Claremont, how desperate seller Ruben Corral concocted a “buy-my-house, get-my-car-free” scheme in Altadena.

Back in ’88 and ‘89, giddy sellers told the war stories about quick-and-dirty sales, multiple offers and bidding wars that tacked on as much as $100,000 to their asking price. Now, in a stunning reversal of fortune, the buyers are having their time in the sun, said Eileen Maloney, a broker associate at Curtis Real Estate in Claremont.

“It’s like Mr. Toad’s wild ride,” she marveled.

For 15 years in Southern California, a house wasn’t so much your castle as it was money in the bank. But that was before the recession-battered market took a spectacular dive.

“No one really considered the fact that the economy might fall out from under them,” said Bob Fry, broker-owner of Equity Plus Properties in Diamond Bar.

Home prices and sales are still dropping in the San Gabriel Valley, according to figures from Dataquick Informations Systems, which analyzes government records of completed transactions. From October to December, 1993, compared to the same period in 1992, the median sales price dropped in 20 of 27 cities; the biggest slide was 24.1%, in San Marino. Among valley cities, the average sales price was $219,111, down 5% from the previous year and down 9% from 1990, when the market was booming.

Also, in the last three months of 1993, the number of home sales fell by 5% valleywide in 1993 below an already snail-paced 1992, from 3,257 to 3,089; Monterey Park was the slowest market, with home sales down by about 25%.

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The result, agents say, has been a new wave of hope for first-time buyers to get a foothold in real estate. The market also has created a new class of losers: once house-rich homeowners who find their equity dwindling every month that the for-sale sign stays up on the front lawn.

Maloney tells of a young couple who sold their condominium to buy a house. The couple paid $425,000 for a Claremont house in the red-hot market days of ‘89, even though it was appraised at $275,000. They added $60,000 worth of improvements, including landscaping and hardwood floors. Recently, they decided to move back to New York and hurriedly sold at $325,000, a $160,000 loss.

Some real estate agents say it’s not unusual for a reasonably priced house to stay on the market for six months or more. Others warn buyers not to wait for another market crash.

“We’ve really bottomed out here,” said Glendora real estate agent Marty Rodriguez, the No. 1 agent in Century 21’s 90,000-member network. “We see the market as being very well picked over.”

These are the stories, a look at the market’s vagaries through the eyes of residents whose lives changed as a result:

The First-Time Buyer

Charlotte Kramer grew tired of tiptoeing around her Claremont apartment at 2:30 a.m. so she wouldn’t wake the neighbors when she got home from her job as a 911 emergency supervisor for Los Angeles County.

Two years ago, the 33-year-old single woman started socking away money to buy a house. But Kramer, who makes $42,000 a year, aimed low. Someday, she thought, she could afford a little house in, say, Fontana and brave the killer commute to work in East Los Angeles.

“I thought I was putting it into a fantasy fund,” admitted Kramer, in her high-spirited, fast-talking way.

Until her real estate agent, Eileen Maloney, called and said there was a 1,300-square-foot bungalow in Claremont that she had to see. Immediately.

The location was perfect--a five-minute drive from Pitzer College, where Kramer is a full-time student, and a 25-minute drive from work.

The house, which listed at $208,000 a year before, had dropped to $155,000 in the seller’s haste to move.

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“I knew at the curb that I wanted this house,” said Kramer, who started the paperwork that afternoon to make it hers.

Kramer walked into the three-bedroom house and instantly pictured where her furniture would go--her china cabinet here, her entertainment center there, her panda picture in the kitchen. The back yard took her breath away, with a redwood hot tub, a droopy Chinese elm and other trees, one of which later became the perfect place for a hammock. The two-car garage struck her as a safe place to park when she got home late at night.

Kramer’s parents gave her $4,000 to help with the $11,000 move-in cost, which included down payment and closing fees.

Kramer’s monthly mortgage payment on the three-bedroom, three-bathroom house is $1,100; her monthly rent for her two-bedroom, one-bathroom apartment was $750. Her deal was not just beginner’s luck. According to the California Assn. of Realtors, more than half the home-buyers in 1993 were first-timers.

In April, 1993, Kramer moved into what a friend dubbed her “Hansel and Gretel cottage” because of the house’s charm. She had the carpets cleaned and did a little touch-up painting. One day, when she was painting, a stray dog wandered in and never left. Kramer, who had wanted a dog, took Honey’s arrival as a sign that she was in the right place.

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Honey, a pit bull-golden retriever mix, lives in the back yard with visiting blue jays, hummingbirds and woodpeckers that dive for the peanuts that Kramer leaves out. Honey is a big hit with the neighborhood kids, and so is Kramer, who reads them stories.

Last Christmas, for the first time, Kramer bought a tree so tall that its tip tickled the living room ceiling. She went crazy with lights and ornaments, and topped the tree with a porcelain angel in a red skirt. After grizzly murder-and-mayhem shifts at work, she liked to lie on her couch and watch the tree’s blinking lights.

At last, she thought. Peace.

The First-Time Buyer

Name: Charlotte Kramer.

Age: 33.

Occupation: 911 emergency supervisor for Los Angeles County.

The house: A 1,300-square-foot Claremont bungalow.

The deal: The bungalow’s owner, in a hurry to sell, dropped the price from $208,000 to $155,000. Kramer’s real estate agent took her to see it the day the price dropped--and Kramer quickly made an offer.

The extras: Kramer’s mortgage payment is only about $300 more than her apartment rent was, and that’s before taxes. The house includes a redwood hot tub, track lights and a skylight.

The Desperate Seller

Ruben Corral braced himself for another gut shot.

He bit the bullet each time he dropped the price on his wood-frame Altadena bungalow, which he bought as an investment last April after he was

laid off from his job as a Lockheed engineer.

In less than a year, his $149,500 asking price has sunk to $125,000. But since September, no one has even bothered to look at the two-bedroom, one-bathroom house. Corral, 44, who lives in another Altadena house with his wife and 10-year-old son, is making $400 monthly mortgage payments on an empty bungalow. His own house payments are $1,189 a month.

It’s a hefty burden on a combined monthly income of less than $4,000. Corral now manages rental properties, and his wife is a nurse.

A few weeks ago, Corral’s real estate agent, Norman Merino, bought him a beer and sat him down for a little talk. Corral steeled himself, thinking he would have to drop his price past the point of no return--he bought the house for $75,000 and added $30,000 in improvements.

But Merino had another idea.

“Let’s throw in your car,” Merino said. “That’ll bring people in.”

Corral thought for a minute. He loved his 1988 Acura Legend--a four-door automatic--but had two other cars. So why not? In fact, at Merino’s suggestion, Corral decided to sweeten the pot even more. He agreed to pop for a trip to Hawaii for the agent who sells his house.

The car is worth about $5,000, a trip to Hawaii runs about $800. The whole package meant that Corral would break even or possibly walk away with about $10,000, if he gets his asking price. He had hoped to make $25,000.

Corral is a good-natured man who recounts his misfortune without a trace of bitterness. So far, about 20 people have called about the deal, and two have asked to see the house.

“I’ll try anything,” Corral said, laughing. “I’ll even have a clown out here one day . . . you know, like those chicken place (promotions)?”

What hurts most is that no one saw the same charm in the house that he did.

When Corral first saw the 1920s-era house, he looked beyond the rotting wood floors, ceiling cracks and peeling paint.

“I just thought it was a cute little house,” he said. “It was a mess, but with a little TLC . . . it’d be perfect for a young family just starting out.”

Corral made all the improvements and renovations himself, except for the electrical work.

“I put a lot of my heart in here,” he said, arms folded.

The Desperate Seller

Name: Ruben Corral.

Age: 44.

Occupation: Laid-off Lockheed engineer who manages rental properties.

The house: A 790-square-foot Altadena bungalow.

The deal: Two-bedroom, one-bath house for $125,000 includes $30,000 in improvements.

The extras: Corral will throw into the deal his 1988 Acura Legend; the buyers’ agent gets a trip to Hawaii.

The Dream House

Barbara and Jim Hester pined for the old Delgatto place, the corner house with bougainvillea vines, prickly pear cactus plants and apple trees. It was a looker of a house, named after its onetime owners, a prominent Sierra Madre family.

For six years, Barbara Hester thought wistfully about the 1927 Spanish-style house, just a mile away from her own in Sierra Madre. The Hesters weren’t really planning to move, although they talked about looking for a place with more space.

In late 1992, on the way back from a nearby open house, the Hesters spotted a for-sale sign on the Delgatto place. That same day, they called their real estate agent, Judy Webb-Martin, and said: Get us into this place.

Barbara Hester, 50, fell in love with the east-facing breakfast nook that catches the morning sun. Jim Hester, a 48-year-old attorney and city planning commissioner, had his eye on the 500-slot basement wine cellar.

“This was the house I had been looking for all my life,” recalled Barbara Hester, an insurance administrator.

But the four-bedroom house was a pricey temptress; the $794,000 listing was enough to make even the smitten Hesters shy away.

Until the housing market took another tumble early last year.

The price sank to $699,000. In March, 1993, the Hesters offered $650,000, but were turned down.

In summer, 1993, the sellers got antsy to move back to Texas and approached the Hesters. After sticky negotiations, the sellers settled on $580,000, 27% less than their original asking price.

Meanwhile, the Hesters had hoped to get $490,000 for their own house but ended up getting about 22% less than they had wanted. But since they had bought 10 years ago for $144,000, there was still enough equity for a down payment, closing costs and moving.

“Everyone ended up giving a little to make it work,” Barbara Hester said on a recent evening before a roaring fire in her new house.

“It’s not that (the market) is crazy,” said Jim Hester. “It has become more sane. What was happening before, prices were absurd. . . . People were buying houses not to live in but for the investment. That was destroying neighborhoods. They would move as soon as they could turn a profit on it.”

The Hesters moved into the 3,100-square-foot house six months ago with their 17-year-old son. Their two-story house plus basement includes original tile, glass and wood floors; bedroom verandas with French doors, and a stunning view that stretches to Long Beach on clear days.

Barbara Hester pulls into her driveway at night after work and marvels that the house is hers.

The Dream House

Name: Jim and Barbara Hester.

Age: He is 48; she is 50.

Occupation: He is an attorney; she’s an insurance administrator.

The house: A 1927 Spanish-style house in Sierra Madre.

The deal: The Hesters, who had already been living in Sierra Madre, had eyed their dream house for years. Eventually, the price dropped, from $794,000 to $580,000. Ironically, their earlier $650,000 offer had been turned down.

The extras: 4,300 square feet, including dumb waiter, wine cellar and French doors that open up to bedroom verandas.

San Gabriel Valley Home Sales

Single-family home resales for October through December, 1993, compared with the same period in 1992. Median price applies to homes sold in that time frame.

No. Sold No. Sold Median Median 1992 1993 % change 1992 1993 Alhambra 315 282 -10.5 $187,000 $167,000 Altadena 100 105 5 $204,000 $186,000 Arcadia 152 136 -10.5 $324,000 $349,000 Azusa 75 81 8 $141,000 $140,000 Baldwin Park 93 103 10.8 $140,000 $133,000 Claremont 83 89 7.2 $228,000 $192,000 Covina 144 153 6.3 $180,000 $162,000 Diamond Bar 130 130 0 $232,000 $225,000 Duarte 52 55 5.8 $178,000 $153,000 El Monte 76 65 -14.5 $156,000 $155,000 Glendora 131 109 -16.8 $205,000 $197,000 La Canada Flintridge 45 60 33.3 $374,000 $417,000 La Puente 358 351 -2 $184,000 $175,000 La Verne 74 71 -4.1 $194,000 $212,000 Monrovia 67 80 19.4 $220,000 $191,000 Monterey Park 65 49 -24.6 $214,000 $196,000 Pasadena 235 246 4.7 $239,000 $268,000 Pomona 229 207 -9.6 $134,000 $126,000 Rosemead 72 57 -20.8 $176,000 $167,000 San Dimas 85 70 -17.6 $244,000 $200,000 San Gabriel 121 104 -14 $227,000 $236,000 San Marino 51 47 -7.8 $615,000 $467,000 Sierra Madre 25 26 4 $249,000 $258,000 South Pasadena 43 42 -2.3 $302,000 $326,000 Temple City 75 74 -1.3 $216,000 $200,000 Walnut 129 102 -20.9 $267,000 $251,000 West Covina 232 195 -15.9 $183,000 $167,000 Average Average TOTAL 3,257 3,089 -5% $230,111 $219,111

% change Alhambra -10.5 Altadena -9.1 Arcadia 7.6 Azusa -1 Baldwin Park -5.2 Claremont -16 Covina -10.2 Diamond Bar -3.3 Duarte -13.8 El Monte -0.6 Glendora -4 La Canada Flintridge 11.6 La Puente -4.9 La Verne 9.7 Monrovia -13.2 Monterey Park -8.7 Pasadena 12 Pomona -5.8 Rosemead -5.4 San Dimas -18 San Gabriel 4 San Marino -24.1 Sierra Madre 3.6 South Pasadena 7.8 Temple City -7.5 Walnut -6.2 West Covina -8.9 Avg. change TOTAL -5%

Source: Dataquick Information Systems/Southern California Real Estate Observer. Dataquick did not have figures for Bradbury, Industry, Irwindale and South El Monte.