Sellers’ new math
FOR four long months, there has been a “For Sale” sign in front of David and Jody Saltzman’s Malibu home. Located in Sea View Estates, on a cul-de-sac in a kid-friendly neighborhood with excellent public schools, the 3,100-square-foot Mediterranean has four bedrooms, three bathrooms, a bonus room and a remodeled kitchen with granite countertops. There’s no ocean view, but the owners believe garden enthusiasts will love the lush landscaping and tropical plants on the half-acre lot.
“I was hoping it would sell in 60 days,” David Saltzman said. When it didn’t, the couple lowered the price by $100,000 in April. They took another $100,000 off in May. With the house eventually listed at $1,495,000 -- making it the least-expensive listing in the development for a house of its size -- they finally entered escrow a week ago.
Though the median home price is higher in Southern California now than it was a year ago, the Saltzmans aren’t alone in their prolonged struggle to sell. Houses throughout Southern California are staying on the market longer than they were a year ago.
Without question, the market has changed. Bidding wars are fewer and farther between. Word-of-mouth sales before a sign goes up are less frequent. And deals struck in the first minutes of open houses are all but history, agents say.
Anecdotal evidence aside, one sure measure of a market slowdown is the number of days homes are listed before a contract is signed. Across the Southland, the median time had grown as of the end of April, the latest period for which figures are available, reports the California Assn. of Realtors.
In Los Angeles County, houses were staying on the market 34 days, according to the trade group, up from 25 days a year earlier. In Orange County, it was 39 days compared with 26, and in the combined San Bernardino and Riverside counties region, 39 days, up from 27.
In some pockets, however, it’s even longer. The average time on the market is 85 days for parts of the Westside and Malibu, said Aaron Lider, an agent with Keller Williams Brentwood, citing figures from the Multiple Listing Service.
“The market is normalizing,” said Lider, calling the development “quite refreshing.”
“It’s taken the panic out of the buyers,” he said. Today’s larger inventory gives buyers more choices.
“It makes pricing accurately far more important than it has been for the last six years,” said Michael Edlen, an agent with Coldwell Banker Pacific Palisades.
When Westside homes were increasing at 18% to 20% a year, an overpriced home might sit on the market, but eventually appreciation would “catch up” to the seller’s price, he said. That’s no longer the case.
Like most things in life, timing is key.
Tuba Ghannadi of Re/Max Palos Verdes listed a 3,000-square-foot house in Palos Verdes Estates during the Christmas holidays for $1,948,000.
“It’s nicely remodeled,” she said of the four-bedroom, three-bathroom contemporary-style home.
But the house isn’t moving.
“In February we lowered the price for the first time. Every month we’ve lowered the price some more,” she said. The asking price is now $1,748,000.
Still, the house sits vacant.
Such price reductions aren’t limited to the $1-million-plus market. In San Jacinto in Riverside County, real estate agent Hugo Florez has seen the price of one of his listings drop every month too. The three-bedroom, two-bathroom house came on the market in April at $275,000. “We dropped it to $265,000 in May, and $259,000 in June,” said Florez, of Real Team Real Estate Center. “It’s not last year’s market anymore.”
In July 2005, Florez had 13 offers in less than a week on a San Bernardino listing. Now, he said, “it is a complete 180-degree turnaround.”
After 111 days on the market, Bruce Kurnik’s clients cut the asking price from $1,489,000 to $1,399,000 for their five-bedroom, 4 1/2 -bathroom house in 3,699 square feet in Oak Park, an unincorporated community of Ventura County.
“We had two offers when it first hit the market, and the sellers didn’t take it,” said the broker with Coldwell Banker Residential, Westlake Village.
Although a price reduction is a standard strategy to move an unsold home, not every seller is willing to settle for less no matter how long the property stays on the market. Some homeowners have the luxury of time. Others require a specific return on their investment. Still others need to maximize the amount they get for their old house to swing the purchase of a new house.
Kurnik has a Van Nuys home that’s been listed for 125 days and counting.
“The seller wants a certain price,” said Kurnik, who listed the three-bedroom, two-bath house for $589,900.
“We had a very interested buyer ... and we were extremely close to putting it into escrow,” Kurnik said. “But the seller said, ‘We’re coming into summer, let’s hold out.’ ”
Even with discounts, houses overall continue to appreciate, albeit in single digits. In April, the median price for the six-county Southern California region was $485,000, a 9% gain over April 2005, according to DataQuick Information Systems, a La Jolla-based research firm.
As sales of single-family homes have slowed, so have those of condos.
As of April, in downtown Los Angeles, where the loft and condo market has been booming, the average days on the market rose from 49 days to 57, at an average sales price of $598,242, according to Condosource, a boutique real estate brokerage firm that specializes in Los Angeles condos and lofts.
Condosource, which tracks Multiple Listing Service statistics, also reported an annual increase in average days on the market from 51 to 71 in the Mid-Wilshire market, where the average price is now $409,810.
Houses and condos can linger on the market for many reasons: price, location, condition or competition from other properties in the immediate vicinity. And sellers, through no fault of their own, can be caught in a market shift.
David Saltzman still doesn’t know why their home sat for more than four months, but he’s philosophical.
“We don’t feel insulted, because there are several houses that have been on the market quite a bit longer than ours.”