All Quiet on the Home Front

The listing reads, “Great house in great neighborhood. Be ready to write an offer.” But several hours into an open house on what should have been a perfectly nice day for house-hunting, less than a handful of buyers had shown up to see the Lake Balboa home, let alone bid on it. It was the same at no fewer than 10 open houses on a recent Sunday afternoon in Van Nuys, Lake Balboa and Sherman Oaks. Things were so quiet that one broker, on hearing that her visitors were reporters and not would-be buyers responded, “Oh that’s okay. At least it’s company.” Behind the most recent statistics out of the Southland Regional Realtors Association showing a dramatic downturn in the number of home sales is another slowdown: the sheer number of buyers out there looking for homes has dwindled considerably. “Last weekend in Woodland Hills I had two people show up. I had another open house south of the boulevard and I had four people,” said Samira Sacket, a broker with Re/Max who, on this particular weekend, was manning an open house on a cozy cul-de-sac in Lake Balboa. “Last year this time my open houses would be at least 15 people.” In July, the number of home and condominium sales combined plummeted nearly 30 percent to 1,126 versus year-ago sales, according to the Southland Regional Association of Realtors. Single-family home resales were off nearly 33 percent and condominiums were off nearly 30 percent of volumes a year ago, the SRAR report noted. Meanwhile, the number of listings is rising, up to 6,381 for condos and single family homes combined in July, more than double the number of listings in July, 2005. The numbers of active condominium listings tripled in the same period. Some would-be buyers figure that the big up-tick in inventory should lead to a corresponding decrease in pricing. “We’re shocked at what people are asking,” said Chip Adams, who was touring the open houses in his Lake Balboa neighborhood with his wife, Chris and son Brady. “From what we can see, there are more houses than buyers. People have done a good job of fixing up their homes, but they’re asking prices they were asking three years ago.” As had been predicted earlier in the year, homes are staying on the market much longer than they did a year ago, when it wasn’t unusual to list a home and sell it within the same week. But less anticipated is the fact that many sellers, finding their homes on the market for a month or more, are dropping their home prices anywhere from 2 percent to 10 percent in some cases. Some of those shopping the market saw the price adjustments as favorable. “Prices seem to be going down somewhat, and that’s nice for a buyer,” said Helen de Gyarfas, who said she had been looking for about a month after selling her last home. “I’m having a hard time finding something I like.” But even some brokers concede that would-be buyers are staying away figuring that the prices will come down even more. “They think the price is going to drop $100,000 suddenly and that’s why a lot of people are waiting,” said Sacket. “A lot of my buyers, even though they’re still looking, they’re not buying. They’re not anxious to place offers.” Some brokers believe the current climate reflects nothing more than the transition from a time when buyers, encouraged by low interest rates, were more plentiful than the properties available. Convinced that home values are going to hold up, they say it’s just a matter of time before would-be buyers realize they are waiting in vain for a bubble to burst. “There seems to be a standoff going on, but it’s a great time to buy,” said Laurie Sharrigan, a broker with Prudential California Realty who was showing a Sherman Oaks home priced at $879,000 on Sunday. But there may be deeper economic reasons for the surge in properties on the market that could lead to lower prices in the future. In the second quarter of this year, lenders sent 20,752 default notices to homeowners in California, up 67.2 percent from 12,408 notices sent in the second quarter of last year and the fastest pace recorded in at least 14 years, according to DataQuick Information Systems, a La Jolla-based company that tracks real estate activity. (A default notice is the first stage in a foreclosure proceeding and does not necessarily indicate a home will be foreclosed.) Although statistics are not available for the San Fernando Valley, the most recent L.A. County data seems to suggest a similar trend. After declining in May and April, foreclosures rose 23 percent in June in the Los Angeles Metropolitan area, and 15.7 percent in L.A. County, according to RealtyTrac, an Irvine-based database publisher. The RealtyTrac Monthly U.S. Foreclosure Market Report noted that some 4,308 properties entered some state of foreclosure, a rate that translates to one out of every 1,260 households. At the same time, costs are rising for buyers, not just by virtue of home prices. Mortgage rates have climbed somewhat from their levels a year ago, and, perhaps more important, as home values have appreciated, so too have taxes (payable by a new owner.) “I think the prices are out of sight,” said Susan Goldstein, an independent realtor who was hosting an open house for a Lake Balboa home with amenities like a pool and a Viking range for $700,000. “It’s not only the mortgage payment, it’s the taxes. This house is absolutely beautiful. It’s move in and it’s been on the market a month and no offers.”