Valley Interview : Real Estate Brokers Are Putting Stressful Times Behind Them

Is it safe? Is it safe?

These days in the San Fernando Valley, the question takes on more significance than as a line from the 1970s film “Marathon Man.” The earthquake may be history, but the Valley’s real estate market continues its wobble.

As sellers struggle to secure insurance funds to repair damages and place their homes on the market, wary buyers are looking more closely at just what they might be getting for their money: Are homes here really safe? What damages might lie hidden within?

The result is a still-shaky market that lags behind the rest of Southern California.

Realtor Fred Sands, who has 37 offices regionwide, seven of them in the Valley, talked about the quake devastation and what it will take for the Valley to rebuild its real estate market, brick by brick.

Sands, with nearly 30 years in the business, admits that he is an optimist. Fred Sands Realty, he says, has sold 3,000 homes this year, up 25% from last year--quake or no quake.

Still, for many homeowners here, that optimism is being put to the supreme test.

Question: What’s been the reality of being a San Fernando Valley real estate broker since January’s earthquake? Has it been tough times here?

Answer: Not exactly tough times. I’d say stressful times. What happened after the earthquake is that a lot of our agents dropped out of selling real estate to get involved in repairing their own homes and putting their lives together. If your agents are not working, sales are not happening. We had one manager who ultimately left the state because she developed an earthquake phobia. During one meeting somebody dropped something outside and she dove under the table. She thought it was another earthquake. We had another manager who stood up in the office and said, “Don’t sell condominiums. They’re not safe.” He also ultimately left the area. So, we lost two managers.

Q: Can you sell real estate in the Valley with a straight face these days?

A: Absolutely. I feel totally comfortable selling real estate in the Valley. I think there are wonderful opportunities and good values in the Valley. I think the earthquake is behind us. And if one lives in Southern California, one knows that the possibility of an earthquake exists. We like to think that the Big One is behind us and that perhaps the Valley is the safest place to live.

Q: A recent report concluded that the economic recovery in the Valley was moving along faster than expected and that the area was going to pull out of its doldrums just fine. Does the same go for its real estate market?

A: Considering the earthquake, the market here is coming along just fine. It would probably be a little stronger, of course, if not for the quake. There are a lot of foreclosed properties on the market now. There’ll be more coming as the moratoriums go off. After the quake, some lenders told people not to make their payments for a while. So some people who now have to make payments on these houses that were badly damaged and where they have no equity will be walking away from the properties. So there will be that kind of property on the market.

But at sales meetings, my people have been complaining of a lack of inventory, that they have buyers out there and there aren’t enough homes to sell. Now, that’s not to say that someone could put their home on the market and overprice it. The buyers today are very, very price conscious.

Q: So, the market here is still depressed?

A: It’s only depressed as to prices. It’s not depressed as to sales activity. I you look at statistics from the San Fernando Valley and the L.A. Board of Realtors, sales are at a high. Sales activity is good. For our company in the San Fernando Valley--and we certainly represent a big part of the Valley--we’re running about 25% ahead of last year. Prices are just not where they should be. If somebody puts their house on the market and prices it right, it sells relatively easily. If they put it on overpriced, it just sits there. In the ‘80s, people would pay anything. In the ‘90s, they want to know they’re getting a good buy. If not a bargain, at least a good buy. Look at what’s happened in Malibu: fires, floods. The people just rebuilt because they love Malibu. The Valley is the same way. The people are very resilient. They go on with their lives.

Q: Nonetheless, The Valley still lags behind the rest of Southern California’s real estate market. How long will it take the area to catch up?

A: We’re somewhat behind the rest of Southern California. Amazingly enough, not as far behind as one would think. One reason is that some people are having a hard time getting their money from insurance companies to reconstruct their houses and, in some cases, putting those houses on the market after they’ve done it. We’re probably 10% behind the rest of the region.

Q: So, what does that mean, that 10% fewer homes are being sold or that sellers are getting 10% less for their properties here?

A: I think, both. Sales are down. And people are getting a bit less money for the homes that do sell.

Q: How long did it take real estate to bounce back in other quake-stricken areas such as San Francisco, Whittier or Upland, and what can the Valley learn from those places?

A: As soon as the earthquake occurred, I talked to people in our company who had been through the Sylmar quake, and I said “What happened? How was it? How many years did it take to recover?” And I was shocked at the answers I got. They said that as soon as the quake was over people went out and got their FEMA loans, started to reconstruct. Once that was under way there was a lot of activity in the construction industry, and then the market gradually returned to normal. It’s not what I would have expected.

Bay Area companies say it was terrible at first but that it was a short-term blip. I’ll tell you something. After a natural disaster, the market recovers very quickly. But something like the riots were much more difficult. People didn’t know how to address that civil unrest. There was more of an unease, and the market took longer to recover than from the earthquake.

Q: Just what is the Valley’s real estate image in Southern California?

A: The image is that there was a terrible earthquake, that the people are rebuilding, have rebuilt and that it’s all coming back. We don’t see fear of ghost towns or empty stores. In fact, there was tremendous commercial leasing activity because so many people were displaced from damaged buildings. For instance, we lost our Sherman Oaks East office to the earthquake. We found a location down the street that had been vacant a year and a half, a former bank building. Lo and behold, there were two offers--one from us and one from another tenant who wanted it. So here’s a place vacant for a long time, and we’re suddenly in a bidding war with another company to get the space.

Q: What do you say to people whose knees are still knocking when it comes to buying a piece of San Fernando Valley real estate?

A: Maybe you shouldn’t be living in Southern California. We have earthquakes here. But look what happened in Florida. It was just a different kind of natural disaster. Wherever you live, there’s going to be some type of fear. You can go to North Dakota and freeze your tail off. Southern California just has so many positive things going for it that they outweigh the negative things twentyfold. That’s what I tell them.