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Condo Sales Rebounding From the Ruins of '81

February 10, 1985|BARBARA BAIRD | Times Staff Writer

On Wilshire Boulevard amid some of the most expensive real estate in the nation stands the rusting steel skeleton of what was to have been a luxury condominium project.

The Evian was the 11th in a succession of nearly $1 billion worth of high-priced, high-rise condominium projects that came on the market just as soaring interest rates brought real estate sales to a standstill in 1981.

The Westside condominium market is gradually recovering. Buyers are returning to the market, attracted by lower interest rates and prices that are, in some cases, half of what was being asked a few years ago.

But the market is still recuperating from the orgy of overbuilding that has swamped the Wilshire Corridor and much of the Westside with condos.

Buyers remain wary of the market that left the Evian unfinished at Wilshire and Warner Avenue, in the middle of the deluxe "Gold Coast" between Westwood and Beverly Hills.

Not Talking

And bitterness lingers among some builders and lenders who suffered losses in the early '80s. A couple of developers who went bankrupt refused to be interviewed by The Times, saying they "just want to forget the whole thing."

In the aftermath of the collapse of the market in 1981, "condominium was a dirty word," said Albinas Markevicius, president of the Santa Monica Board of Realtors.

According to a score of real estate brokers, lenders and economic researchers interviewed by The Times, condo sales have improved gradually in the past few years as prices have been reduced.

Markevicius said that prices have been cut 10% to 15% on units originally tagged at $200,000 or less, while more expensive units have dropped as much as one-third throughout the Westside.

In the luxury category, where condos were listed as high as $11 million at the height of the boom, some prices have been cut in half.

Brokers and lenders said they expect an increase in sales this year as buyers take advantage of price reductions and lower interes rates.

"This will be a phenomenal year for the real estate industry," said Steven H. Gold, chairman of the board of Center Financial Group Inc., a real estate investment banking firm in Century City.

Market Seen as Healthier

"There will be a strengthening of the housing market on a permanent basis," he said. "We will start seeing the market go back to a buying environment--interest rates are coming down and are going to stay down. People are more confident that the country is not going to collapse. There will be a permanent strengthening of housing sales because of that."

"The market is much healthier, long-term, than the speculation fever that occurred from 1975 to 1980," said William S. Mortensen, chairman and president of First Federal Savings & Loan Assn. of Santa Monica. "People are buying condos like they used to buy houses, for housing for themselves, not for speculation."

Because of the high cost of single-family houses on the Westside, condominiums offer many people their only chance at home ownership here: Brokers say that there are practically no single-family homes under $150,000 and most are in the $300,000 to $500,000 range. Many cost $1 million or more.

The Westside is such a sought-after area that many people prefer to live in a condominium here rather than in a single-family home in the San Fernando Valley or other more distant areas, brokers said.

Condominiums may be less expensive than houses, but many of them are beyond the financial reach of middle-income buyers.

Many condominiums here are very expensive because land in the area costs as much as $125 a square foot, and developers see the potential for big profit in the Westside's prime neighborhoods.

Brokers said, however, that the best-selling condos are in the lower price range, starting at $100,000 to $150,000. Sales are much more sluggish for units costing $250,000 and more, they said.

Statistics compiled in mid-1984 by the Real Estate Research Council of Southern California show a big gap between the price of new condos sold and those still on the market.

The median selling price for new units was $165,000, while the median asking price of the unsold units was $295,294. The $130,000 difference is much greater than for new single-family homes, where the median selling price was $300,000 and the median asking price was $333,913.

Joel Singer, chief economist for the California Assn. of Realtors, said the statistics show that "in general, the lower-priced product is moving much more rapidly than the higher-priced . . . the more affordable, the more marketable."

Wide Price Range

Westside condominiums in the end-of-1984 multiple listings ranged in price from $38,900 for a small bachelor apartment conversion in West Hollywood to $1.85 million for a luxury unit in Brentwood.

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