A Boom of Mythical Proportion?

Real estate and lending experts reported recently that Valley property values have bounced back halfway to their previous highs, reflecting a significant gain from the decade-low sales figures posted in 1996.

Although heartened by the latest statistics, the experts warned that it could take at least two years before Valley homeowners see a return to pre-recession pricing values.

DIANE WEDNER asked a longtime real estate broker, a home seller and a home buyer about the realities of the current market, based on their recent experiences.

KEN BUCALO / Broker associate with Gibson and Associates Realtors, Studio City

Sellers are hearing that prices are up markedly in the Valley, and to a certain extent that’s true. Howver, the myth that prices have come back to their previous levels is just that: a myth. Sellers who are waiting for prices to return to 1989 levels may be holding on for a very long time. In fact, we may never go back there. Buyers are aware that the economic climate today is shaky, and their caution is helping to keep prices healthy, not out-of-sight.

In my 26 years in this business, I and many others came to believe we were immune to the economic hills and valleys that affected other parts of the country. The recession brought to light that we’re linked to the rest of the world and are affected by their economic problems.

The opportunities for first-time buyers is optimum right now because of the availability of low down payments and because of low interest rates. I think we’re on a long, solid road to real estate prices climbing, but in a rational, world-economy-based culture. If one is interested in purchasing a residence, now is the time to do it.

BRUCE BOTTONE / Valley Village resident who recently sold his home

I bought my house 10 years ago, and its value went up quickly and significantly. I put the house on the market in the early ‘90s, but took it off in the mid-’90s when the bottom fell out of real estate. During that time my neighbor, who had a nearly identical house, passed away, and I saw that her [grown] children had to practically give the house away.

Banks, buyers and sellers are more cautious right now. Ten years ago, I had planned to sell my house down the line for a $100,000 profit. The reality today is that you can’t achieve that.

Last summer I decided to put the house on the market again, after prices started rising in the spring. I felt it was finally a good time to get back in. I listed the house so that I could get back most of what I had put in by remodeling. Even though I didn’t get as much out of it as I had hoped, I still did pretty well. I held on about four years past what I had wanted to because of the [depressed] market. The bottom line is that you want to get cash out of the sale of your house so you can buy another one. Anything extra is gravy and tough to get.

I hope we don’t go back to the real estate of the ‘80s. It’s more realistic now. I prefer a slow increase, where we all make a little profit in order to move up to a nicer house. A buyer doesn’t feel like he’s being taken.

BABBIE GREEN / Valley Village resident, recently closed escrow on a Sherman Oaks home

I came to Los Angeles 21 years ago and have always rented. Although the prices are starting to go up in the Valley, they are not out of sight. Because it looked like they could get out of hand again, I decided to get in now.

My initial impression was that I wouldn’t be able to get the space I wanted. I started to look seriously in October and found the house I ended up buying on the second day of searching. I had decided to look only at houses that I could afford, even if they weren’t the ones of my dreams.

The house I just bought had been on the market since spring, and the seller had remodeled it. He had originally priced it far above what he could actually get for it. I came in just as he dropped the price.

As a first-time buyer in California, I had been scared because of the stories about prices. I was surprised at how much I would have to do here in the Valley to make the houses in my price range livable. I was lucky to get the house I did, where the work was already done. I recently talked to a young couple who had been looking for a year for a three- to five-bedroom house but couldn’t find it in their price range. They have kids and need the space, but the house they need is out of sight.