Willie London wanted to sell his well-kept, three-bedroom Lynwood home and move to a better neighborhood. But who would want to buy a house near areas plagued with gangs and crime, particularly in a depressed real estate market? He listed the price at $172,000, and prayed.
About the same time, a professor at a Long Beach college put his penthouse, beachfront condominium for sale. The asking price: $430,000. A steal, brokers said, for such a gem.
The professor, who asked that his name not be used, received not one offer in four months.
Willie London sold his house in a week.
One word explains both scenarios: affordability.
Among the hottest areas for selling property right now are those with the reputation--rightly or wrongly--of being the worst places to live.
Families are buying where they can afford to: Compton, Lynwood, South-Central Los Angeles, Willowbrook, Watts, and parts of Long Beach, East Los Angeles, Carson, Inglewood and South Gate. In many cases, buyers choose to cope with potential neighborhood problems rather than sacrifice dreams of home ownership.
More prosperous areas of Long Beach and the Southeast, on the other hand, are suffering from the same malaise affecting real estate nationwide.
"We handle Compton and Lynwood," said LeFrancis Arnold, president of Century 21 Arrow Realty Inc. in Lynwood. "It's a good market. The things I'm seeing at a national level and in the Southern California area have not affected our market as negatively as it has others."
Of some 100 Los Angeles County branch offices in his district, Arnold's is running No. 3 in total transactions and No. 8 in commission dollars earned, despite the smaller commissions that come with less expensive properties. Other Century 21 offices that serve part of the same area also are faring well.
"My average sales price is the lowest of all the Century 21 offices in the region," Arnold said. "The average sales price for this office last year was $115,000."
Some of this activity in less prosperous areas involves purchases in gated communities or townhouses with security systems. But the rest of it happens in old, established neighborhoods prejudged to be in mortal decline.
Market conditions could reverse that.
"You're going to see a change in some of those neighborhoods," said Earl Bonawitz, director of marketing and training for one of Century 21's regional offices. "You're going to see them cleaned up. You're going to see pride of ownership coming into some of those neighborhoods that you haven't seen in the past.
"For a while it was all non-owner-occupied properties being bought and sold. Now you're seeing people buy those properties who want to live in them."
Said realtor Arnold: "You can get a beautiful home in Lynwood for under $200,000, three or four bedrooms, 5,000-square-foot lot, sometimes a pool. It's the same with Compton."
For better or worse, the active low-end market has pushed prices up in that category. "Our average sales price is about $13,000 higher this year than last year," Arnold said.
In contrast, properties in Beverly Hills are selling, on average, for more than a million dollars less than their listed prices and staying on the market an average of 131 days, according to a recent study by Jon Douglas Co., a realty firm.
But high asking prices have dulled the market well beyond Beverly Hills. Business is slower in La Habra Heights, a desirable, rustic hillside community where horse trails wind between acre lots. Home prices ranging from $400,000 into the millions have brought fewer takers in recent months. About 18 months ago, properties in La Habra Heights took one to six months to sell. Now the more common wait is six months to a year, said Eileen Greene, a La Habra Century 21 real estate agent who specializes in that area.
The picture is not much different in the Whittier area. Brokers there estimate that the marketing time to sell a house has increased from less than six days to 60 or more days. "We used to specialize in selling homes worth $300,000 to a million dollars," said Dennis Rosas, who owns Home Brokers Inc. in Whittier. "We have now gone back to selling whatever we can get our hands on."
Whittier homes selling for about $225,000 in early 1989 now go for about $190,000, which would force some recent buyers to take a loss if they had to move, Rosas said. "We have two kinds of sellers: unrealistic and realistic," he said. "The unrealistic are still trying to tack on that 10% to 12% appreciation per annum, and they're not going to get it."
Nor are real estate investors thriving as before, said Maurilio Gonzalez, who buys foreclosed properties, refurbishes them and resells them. He estimated that more than 60% of those who buy homes to resell "are hurting or running scared because of the market change."