Area Real Estate on Solid Ground

If there were an Oscar category for real estate, the 1998 San Fernando Valley market would be a shoo-in for “best performance in a decade wracked by recession and terrifying natural disasters.”

Think of the flick as “Try Hard 2: Another Comeback for the Comeback Kid.”

As expected, the 1998 real estate market in the Valley posted the best showing of the ‘90s. Figures for December are not in yet, but stats through November show that monthly single-family home sales averaged about 1,100, nearly double the anemic 640 monthly average posted in 1992, just before Los Angeles County hit the depths of the ‘90s recession. For each month in 1998, home sales topped the corresponding month in previous years, going back to the late 1980s.

But in some respects, that’s like saying you beat your kid sister at tetherball while her good arm was in a cast. How much would it take to best the markets of the earlier ‘90s, which took a prolonged pounding, with home values falling in many cases by more than a third?

However, it’s difficult to objectively assess the market of 1998 with just one hand: For every piece of good news there’s that pesky “on the other hand . . . “ thing.

In the final analysis, the market may be as significant for what it’s not as for what it is:

It’s no record-setter, although in some months it came close to matching the frenetic sales pace of the late 1980s.

For the first half of 1998, sales prices for single-family homes nearly mirrored, and in some months beat, the super-heated values of 1988. But on balance, property values in the Valley are still about 15% shy of their peak highs, industry researchers said.

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The Valley Cinderella made an impressive appearance at the recovery ball in 1998, only to find that her rich stepsisters from the Westside and the coast started dancing with the prince nearly three years ago.

So 1998 turns out to be one of those good news, bad news, half-full, half-empty kinds of markets that will be remembered by many in the industry as the year the hemorrhaging stopped.

“What is significant about 1998 and the last half of 1997 is that there clearly is a turnaround in the market,” said Nima Nattagh, research director with First American Real Estate Solutions, formerly Experian. “Values are no longer depreciating and are nudging upward. It’s the best year so far in the ‘90s, but not the best year on record.”

A bullish Bud Mauro, who is serving his final weeks as president of the Southland Regional Assn. of Realtors, feels that 1998 has been “good news, good news,” a year in which “every month . . . surpassed the same month in the previous year . . .

“As far as the value of real estate today versus 1990, yes, the prices are still off. But the significant point is that the economy has recovered,” he added.

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“We don’t want to dwell on the negatives because the positives far surpass the negatives.”

Likewise, Leslie Appleton-Young, chief economist for the California Assn. of Realtors, thinks we should be “very excited about ‘98,” which she views as the first full year of recovery for the Valley market.

“The Valley performed extremely well,” she said.

Nattagh, the real estate researcher, agreed that the recovery is well underway in the Valley, but noted that so far, progress is spotty.

Out of 47 Valley neighborhoods surveyed by First American, which measures the value of the same properties over time, only four communities had home values in October that were at or above 1990 levels.

While homes in Studio City, Sherman Oaks, Encino and parts of Burbank have met or surpassed 1990 prices, most of the Valley remains in the minus column. Some areas, such as parts of Winnetka and Van Nuys, are still burdened by decreases of 30% or more from 1990 levels.

“There has been a turnaround in the housing market, but it’s patchy,” said Nattagh.

“Relative to the peak in 1990, a typical home in the Valley is still in negative equity, to the tune of about 15%.”

Appleton-Young noted that the Valley has been hampered in its recovery effort by several factors.

For one, she said, the Valley was hurt by a large number of property foreclosures, which flooded the market with inventory selling at bargain-basement prices. Also, she noted, “the economic recovery in Southern California started at the high end” of the market, most notably on the Westside and tony areas such as Palos Verdes.

“In real estate there is a trickle-down effect from where the recovery starts,” she said, noting that it began on the Westside and the coast in early 1996 and seeped into the Valley in mid-1997.

“After what we’ve been through, we’ve had an unbelievably strong year in the Valley,” she added. “The Valley has performed so well.”

Mark Johnson, vice president of Troxler & Assoc., a Woodland Hills-based mortgage broker, said business at his firm in 1998 was about double what it was in 1994, which he saw as “probably the hardest year in the last decade.”

The year started with sales perhaps a bit too strong, he said, then leveled off to a more sustainable pace. Now, said Johnson, who’s been in the business since 1986, “there’s less of a frenzy. I think it’s a better market.

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“The Valley has become an excellent value again, when you look at the Westside,” he added, noting the dollar-stretching property of homes here. “So the Valley will do well.”

While values and sales levels are approaching their peaks, one area that continues to lag is employment.

As the market bottomed out, the industry lost legions of once faithful foot soldiers and now finds that the number of real estate license holders statewide is down by nearly 80,000, or 21%, from peak employment levels.

Locally, membership in the Southland Realtors association is down by nearly half--with about 6,000 members today compared with 11,000 in 1980.

“There’s been a terrific shakeout over the past seven or eight years,” said Dan Garrett, assistant commissioner of the California Department of Real Estate. He added that this year, employment within the industry is “starting to make a little bit of a comeback . . . but it’s not a stampede by any means. We had 80,000 people fall out and they’re not coming back.”

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That’s in part a function of changes in the industry that made it less attractive to part-time agents. But it’s also a measure of the attractiveness of real estate as a profession.

It’s a tough business, Johnson and others concurred.

And if you’ve been thirsting for good news since Kevin Costner was dancing with wolves, who can blame you for seeing the glass as half-full?

Valley @ Work runs each Tuesday. Karen Robinson-Jacobs can be reached at Karen.Robinson@latimes.com.