Signs of a Comeback in Valley Housing Market
It’s a four-bedroom home, south of Ventura Boulevard in Woodland Hills. In the late ‘80s it sold for $399,000. Then it lapsed into foreclosure, a common event in the ‘90s as aerospace jobs vanished and the San Fernando Valley’s housing market nose-dived.
Recently, Liz Grant saw the home, liked it instantly, and found herself in a bidding war to buy it. The bank finally accepted her $275,000 offer, which was the full asking price.
Grant had looked in Santa Monica, but all she and her husband could afford there were one-bedroom 1,000-square-foot-boxes; their Woodland Hills home covers 2,600 square feet.
“We have to put up with the heat in the Valley, but we know we’re getting more for the money,” Grant said. She thinks her home will also climb in value.
It all sounds like a reprise from a decade ago, when homes in the Valley sometimes sold before an open house was even held, and property values climbed 10% to 25% a year.
Now, with multiple offers sometimes rolling in on the same home, real estate agents say the local housing market is reviving.
It’s not a gold rush, and prices are still flat, but Valley housing sales this year are the strongest--and the housing inventory is at its lowest point--this decade.
From January through May, 5,478 single-family houses and condos were sold, up 47% from the low point of four years ago. Meanwhile, 6,319 homes were listed for sale in May, less than half the housing inventory in May 1990, according to the San Fernando Valley Assn. of Realtors.
The remaining weak spot is prices; in May the median resale price of a single-family house in the Valley was $166,000, down 3% from May 1995, and down 31% from the high-water mark of $240,000 in 1991.
Soft home prices are a problem throughout California, the one exception being the San Francisco Bay Area.
In the first quarter of this year resale prices on homes fell 2% in Los Angeles County compared to a year earlier, while the number of properties that sold climbed 13%, according to Experian, an Anaheim Hills real estate information firm. In Orange County, first-quarter home sale prices dipped 3%, while sales spurted 19%. And in the strong Santa Clara County market, home to Silicon Valley, prices jumped 10% in the first quarter while sales vaulted 32%, Experian reported.
Locally, one of the hottest spots is the Calabasas-Agoura-Westlake Village-Ventura County corridor, a magnet for families seeking the promised land of better public schools, more room and less crime.
Prudential California Realtor Mary Fealkoff sells homes in the area, and says 1997 will be her best year this decade.
“We still have a lot of people moving out from the San Fernando Valley,” she said. “Clients are pulling money they made out of the stock market, and saying, ‘We’re going to bite the bullet on what we lost in our [other] house. We’re going to move on.’ ”
In some neighborhoods, she said, “We’re seeing price appreciation, up 1% or 2% in the last 45 days.”
Ron Prechtl, who runs his own Century 21 office in Granada Hills, has been selling Valley real estate for 18 years. Two years ago, Prechtl, his wife and their small children moved from Northridge to Oak Park, just over the Ventura county line.
“In our tract it’s real hot now,” he said, and their home has nudged up a couple percentage points in value. “I wish I could say the same thing about the Valley.”
But there are encouraging signs. Prechtl recently listed a foreclosed townhouse in Sylmar, which long ago sold for $150,000. The bank wanted $90,000 for it, the townhouse drew several offers and it sold for several thousand dollars above the asking price.
“There is no real rhyme or reason” to which properties trigger multiple offers, Prechtl said. “And I think that’s because it’s a sporadic recovery.”
He added, “But demand is a little higher and the inventory is down. That’s the first sign there is a swing in recovery.”
Sandra Gibson, a Fred Sands real estate agent, makes half of her sales from new homes or remodeled ones, and she’s noticing a pickup in demand on the floor of the Valley.
She represents several home builders who have bought empty lots in the Valley, or have torn down old homes and put up bigger, new ones. She recently sold nine new homes in Encino south of Ventura Boulevard in the $500,000 price range.
Certain buyers want only a home that doesn’t need any repairs, and that can trigger multiple offers.
“People have heard about the nightmares of remodeling. And a lot of bank-owned properties are not really done with quality. Buyers want a nice, pretty house where you can turn the key and have a party that weekend,” Gibson said.
“But I do not like to use the word ‘appreciation’ yet,” she said. “I’m just happy prices are not declining anymore.”
One reason for the stronger market is that there are fewer foreclosures, so the housing inventory is shrinking.
Great Western Bank now has 700 foreclosed properties, most of them in the Southland, half that of a year ago, and down from 3,000 in 1993.
In the the late ‘80s it was unheard of to have 100 foreclosed properties, said Lynn Effinger, with the S & L’s foreclosure department. “We are seeing more multiple offers,” he said. “We have a strong sense the market has improved.”
Heide Bernhard, with Downey Savings, expects her S & L to close out 1997 with fewer foreclosed homes than it began the year with, for the first time in five years. In the San Fernando Valley, foreclosed homes typically sell within 60 days, she said, although it can still take six months to sell something in the Antelope Valley.
Home builders also sense a turn in the market.
Larwin Development, a home builder in Encino, has bumped up its new home prices 5%, and says its offerings are still selling briskly in Santa Clarita, Camarillo and Oxnard.
“Since the beginning of the year we’ve seen a 30% increase in demand. It’s our first strong year since 1989,” said Paul Howard, director of sales and marketing.
Kaufman & Broad, the biggest home builder in the state, is also closing out sales at two new home developments in Woodland Hills. One development, near Pierce College, has three homes left in the $350,000 range in a 36-home gated community. At another, more expensive development, the company has sold, or has in escrow, 11 of 18 planned homes, and it is expected to be sold out by September.
“It’s still not like in Orange County, where a mini-boom is going on. But the Valley is definitely stronger than what it was,” said Nick Lehnert, Kaufman & Broad’s vice president of sales and marketing. “And we’re looking for more land in that area” to develop.
Despite these encouraging signs, it will still take a big jump in home prices to help bail out the thousands of Valley homeowners who have little or no equity in their homes, or who owe more on their mortgages than their homes are worth. Until then, they will remain house prisoners, and their pent-up housing demand will sit dormant.
Realtor Prechtl said that entry-level homes in the Valley, priced up to $170,000, are selling briskly, and demand is relatively strong for homes priced over $300,000. But the mid-priced market is a dead spot.
“I just think the middle market has gone. We’ve lost so many middle-income jobs. A lot of people would love to sell if they could get enough to pay off their loan. When the market really strengthens, more people will get up to break-even or better. People will say, ‘Wow, we’ve got equity. Now let’s move,’ ” Prechtl said.
Gibson says that many of the clients she sold homes to in the ‘80s call her every six months and ask her to run comparative prices on their homes, hoping they can escape. “They want to move,” she said. “But those people can’t get out.”
Tom Ferguson is trying to work a bit of real estate magic so he can exit his home in West Hills. He and his wife want to find a new home somewhere between Agoura and Camarillo for their young children.
His problem is that he bought his four-bedroom home 10 years ago, and pumped in $50,000 in improvements. He’s realistic and knows that he can’t recoup all that, but he’s hoping to sell his home for a bit more than he paid for it.
To help assemble a grubstake for a down payment on a house farther west, he’s trying to sell his home by himself to save several thousand dollars in real estate commissions.
Ferguson’s home is priced at $238,500. About 60 people have looked it over in three months, but he’s still waiting for a strong offer.
“Maybe we could try leasing it for a couple years so we don’t lose out on any appreciation and then sell it,” Ferguson said. But he still needs a down payment, and he worries about getting stuck with problem tenants if he rents out his home.
So he’s prepared to stick it out another year, and hope to find a buyer.
Prechtl knows this heartache. He bought his Northridge home in 1990 at the peak of the market.
“I couldn’t get rid of it unless I wanted to write a big check” to the bank, he said. Now he’s renting it, and hoping the market will improve and fatten prices.
It could be several years or longer before prices climb enough so his Northridge property jumps and matches the value of his mortgage, Prechtl says. “I hope to see it in my lifetime.”
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Housing Sales
After being in a slump for most of this decade, the residential housing market in the San Fernando Valley area is finally starting to show signs of reviving. Although sale prices for single-family houses and condos remain flat, Realtors are encouraged because the inventory of homes for sale keeps shrinking, while the number of properties sold keeps rising.
Valley residential properties sold
* January-May; in thousands
1990: 5,416
1997: 5,478
Inventory of residences for sale
* May; in thousands
1990: 13,561
1997: 6,319
Sources: San Fernando Valley Assn. of Realtors
