It was the end of yet another long day in the real estate business.
A few realtors were sitting around Jon Douglas Co.'s Santa Monica office, shooting the breeze about the slowdown in home sales.
After a while, veteran realtor Betty-Jo Tilley had an idea: All the agents in the office should gather for a party to talk about the housing slump and ways to overcome it.
And as a joke, they could hand out mock awards to agents who had the worst real estate war stories--a prize for "the worst escrow horror story," a "medal of valor for courage in the face of a difficult client" and the like.
By all accounts, the potluck party went just fine--but the mock awards ceremony was never held. "The idea just sort of fizzled," Tilley said.
Indeed, there just isn't much to joke about in the slumping real estate industry these days, no matter what segment of the business you're talking about.
Thousands of realtors are expected to quit by the end of this year and, in some cases, entire offices are closing. More than 30 Century 21 offices in the Southland have been shut down over the past several months, and Jon Douglas Co. recently announced that it could soon fire as many as 500 agents.
New-home builders, unable to entice buyers even after slashing prices, are cutting staff and downsizing construction plans. Housing starts in California are down about 35% from a year ago, and another decline is forecast for next year.
More than 26,000 construction workers have lost their jobs in the past eight months, and another 65,000 are expected to be thrown out of work next year.
Many lenders, with profits plunging, also have closed offices and laid-off workers. Skittish about the future of California home values, some have reduced their lending activity and made it tougher for new borrowers to get loans.
The real estate slump has brought some good news and some bad news for consumers. Home buyers have benefited from sellers' price cuts, and they're getting better service from realtors and lenders.
On the downside, sellers' dreams of reaping huge windfalls from a quick sale have been replaced by nightmarish months of waiting for a buyer to materialize.
Here's a detailed look at how workers in the real estate industry are coping with the soft housing market, and how the slowdown is affecting consumers.
A year ago, when the real estate market was humming along, bowls of popcorn and candy were scattered about the busy Woodland Hills office of veteran broker Tom Carnahan.
But those bowls are gone now--not because his 26 agents have lost their taste for snacks, but because sales in the San Fernando Valley have plunged nearly 30% from a year ago.
"Cost-cutting is the rule now, not the exception," Carnahan said.
"We've cut down on advertising and phone calls, and I'm not taking out as many people to lunch or having it brought in. If we have a choice of buying candy or buying a little more advertising, we'll take the advertising."
Indeed, the heady days of the late '80s--when prices in many Southland communities soared more than 20% a year and homes often sold the day they were put on the market--are long gone.
In Los Angeles, resales are down 22% from their year-ago levels. Sales are off 32% in both Orange and Ventura counties and 21% in San Diego County.
Even in the once-strong Inland Empire, home resales have plunged nearly 23%.
Prices in most parts of the Southland have also dropped.
The median-priced home in Los Angeles County now sells for $210,240, down nearly 4% from a year ago.
Values in some of the city's most expensive areas--such as Bel-Air, Brentwood and some other parts of the Westside--have dropped more than 10% from their 1989 levels, realtor statistics show.
Those same statistics show that home prices are down about 5% from year-earlier levels in Orange, Ventura and San Diego counties.
Realtors in the Inland Empire of Riverside and San Bernardino can sadfully boast that they're in the Southland's strongest market: Although prices there haven't gone up over the past 12 months, they haven't gone down, either.
"The market has obviously declined from its levels of '88 and '89, and it's going to keep cooling down next year," said Leslie Appleton-Young, an economist with the California Assn. of Realtors.
She predicts that sales next year will drop another 15%. And perhaps more important, the value of a median-priced home won't go up at all.
One sure sign of the slowdown is the number of homes for sale. There are about 13,000 homes on the market in the San Fernando Valley, up 14% from a year ago and more than 50% from 18 months ago.
The Los Angeles Board of Realtors, which represents many parts of the pricey Westside as well as other areas close to downtown, reports that there are about 8,000 homes now for sale--up more than 30% from last year.
Double-digit increases are also being reported by individual boards from Santa Barbara to San Diego.