Home Listings Are Sparse in Buyer’s Market : Real estate: Earthquake and recession have had impact on what is up for sale. Many would-be buyers cannot find homes free of quake damage.
The San Fernando Valley real estate market may still be a buyer’s market, but these days it’s getting harder to find something to buy.
Many would-be sellers have mothballed their “For Sale” signs to wait for prices to rise, and perhaps thousands of properties have been scratched from the market after sustaining damage in the Jan. 17 Northridge earthquake.
As a result, the inventory of existing single-family homes and condominiums for sale in the Valley area has shrunk to its lowest level in six years, according to the San Fernando Valley Assn. of Realtors. Listings totaled 7,742 in October, down 32% from a year earlier, and 48% below the peak set in July, 1992.
“The myth is that it’s very difficult to sell houses right now,” said Karin Basin Miller, an agent with the Bob Miller Real Estate Co. in Studio City. “It’s difficult to find a house.”
The reason homeowners are reluctant to put their properties on the market, agents said, is that Valley prices are still scraping bottom. The average single-family home sale price in October was $227,300, about $41,600 below the average price in 1988. Even though the number of sales in the Valley has recently surged as much as 20% over a year ago, many of these are quake-damaged or foreclosed properties going for discounted prices.
Miller said she now represents 10 potential buyers, including one couple that has been looking for over a year for a four-bedroom home with a swimming pool in Sherman Oaks. They are willing to spend $500,000, Miller said, but they don’t want anything that needs quake or other repair work, and that has been a considerable obstacle.
“They want something that’s done, but there are very few done houses,” Miller said. “It’s tough for somebody to think they have half a million dollars and can’t find what they need.”
Few shoppers are required to be as patient as the couple Miller described, especially in the lower-priced end of the market, where supply is said to be more plentiful. Still, agents throughout the Valley say pickings are slim.
At the Fred Sands Realtors office in Woodland Hills, the inventory of homes and condominiums they have listed for sale has dwindled from 275 last year to 160 currently, said Todd Shapiro, associate manager of the office. “We’re not down to the point where there’s 15 people fighting for one listing,” Shapiro said. “But choices are limited.”
Agents who a year ago were desperately unloading listings are now clamoring for more. “Brokers didn’t want listings because they were not selling,” said Jerry Berns, an agent with Re/Max On the Boulevard in Sherman Oaks. “If you take a listing now, the chances are that it’s going to sell.”
With inventory once again at a premium, agents have resurrected the marketing ploys brokers have used for decades to compete for listings. In a recent newspaper advertisement, Berns promised that if he couldn’t sell a property within eight weeks, he would forgo his share of the sales commission agents typically collect. (Generally, the company that lists a property for sale gets a 3% commission, and the brokerage finding a buyer gets the other 3%. Both commissions are paid by the seller.)
In other ads, inventory-hungry brokers have offered trips to Hawaii or 1,000 lottery tickets at the close of escrow. Some agents even offer cellular phones or $100 travel coupons just for interviews with potential sellers.
Since 1991, the number of real estate agents in the Valley has shrunk 30%, the realtors group said, but some brokers say that hasn’t made it any easier to get listings. In another recent newspaper ad, Marsha Swiller, an agent with Bradbury & Co. in Studio City, offered $500 in cash at the close of escrow. The response to the ad?
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“Not one call,” said Swiller, who has watched her inventory dwindle from eight properties to two over the past year. “I would love to have listings, but people are not running out to put their houses on the market.”
How long homeowners will have to wait for prices to start climbing is anybody’s guess in a market that lately has seemed to defy logic. Even though supply is down and demand is up--a combination that would ordinarily push prices higher--average sale prices have tumbled 5% to 10% since last year, according to the Assn. of Realtors.
The earthquake has contributed to the confusion. While many properties were pulled off the market after the quake, hundreds of others have been sold with damage at bargain prices that are difficult for undamaged homes to match.
Also, the lingering effects of the recession have created turmoil, as banks continue to sell foreclosed properties at deep discounts. Foreclosures in Los Angeles County totaled 17,381 in 1993, but through August of this year foreclosures had already exceeded last year’s total by 19%, according to TRW REDI Property Data in Riverside. In the Valley, agents said, foreclosures and other problem properties account for at least 30% of the properties now for sale.
Bob Steinhauer, a broker with King Realty in Sherman Oaks, said his office made 20 sales in October. Of those, 10 were foreclosures and two were so-called “short pays,” properties sold by owners who owed more on their mortgages than their properties were worth. “If you took away the (foreclosures) and the short pays, it would be a disastrous month,” Steinhauer said.
Even if all the problem properties suddenly disappeared, it is unlikely that prices and inventories of healthy properties would start a rapid climb. With interest rates rising and local job growth stagnant, housing demand remains soft.
“I’m hearing from brokers that good new listings are moving pretty fast,” said Jim Link, executive vice president of the Valley Assn. of Realtors. “But it’s not like a buyer frenzy. Right now everything is very price-sensitive.”
Inventory may begin to rise again in the first quarter of next year, Link said, as earthquake repairs are completed and owners gear up for the traditionally active markets of the spring and summer. But prices may not climb significantly for years.
In the meantime, Clarence Senger, an agent at the James R. Gary Co. in Woodland Hills, said brokers ought to be careful what they wish for. “If I had more listings, that would be great,” Senger said. “But if we all doubled our inventory, we’d be in a buyer’s market worse than it is.”
