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Bottom Line: Housing Market May Be Mending : Real Estate: Despite a three-year slump, experts say prices are stabilizing, especially for homes under $500,000.

August 22, 1993|PATRICIA WARD BIEDERMAN | TIMES STAFF WRITER

WESTSIDE — What do Westsiders want to know even more than who's in Heidi Fleiss' little black book?

They want to know if the local real estate market has bottomed out yet.

The answer is yes, say at least some of the people active in Westside real estate. It's news that can't come too soon for people who can't sell their houses for what's left on their mortgages.

Ron Wynn is one of the optimists. A Westwood-based vice president with the Prudential California Realty, Wynn said he saw a dramatic change in the market around Aug. 1.

The local real estate slump is now in its third year, and until recently, Wynn said, "I've been busy, but it's been a struggle. Then suddenly, in the last three weeks, I've had multiple offers and full-price sales."

Wynn said he recently sold three houses in West Los Angeles at their asking prices, which were under $500,000. "Three weeks ago I thought prices would go down another 5% to 7%, but now I'm not so sure."

Banker John Miller also thinks the tide is turning.

Senior vice president of the mortgage division at Brentwood Bank of California, Miller speculates that the current buyers' market could become neutral as early as the end of this year. Miller has his own measure for the health of the real estate market. It's the amount of money in the bank's "pipeline"--the value of residential loans currently being processed.

In January the bank was processing 100 loans worth about $21.6 million. It is now processing 350 loans worth more than $77 million, he said.

Houses in the $250,000-to-$350,000 range are what's moving, according to Miller. "When you get above $650,000, it's a little slower."

Miller said the Westside seems to be much closer to recovery than such still seriously depressed areas as Lancaster-Palmdale and the Inland Empire. The western San Fernando Valley and eastern part of Ventura County are also strong.

Miller is also encouraged by the increase in new-purchase loans. As recently as January of this year, he said, 80% of his business was refinancing existing loans. That figure has dropped to about 60%.

Erny Pinckert also thinks the market has bottomed out--at least at the low end, which continues to be heart-stoppingly high by Iowa standards.

Another vice president with Prudential California Realty, Pinckert described the current Westside market this way. "Three-hundred thousand and under has bottomed out. From $300,000 to $500,000, it's firming up. From $500,000 to $1 million it's still loose, and from $1 million up, it's spotty."

Pinckert doesn't think the market will fully recover until more people have enough equity to trade up. But he doesn't think the slump has been a bad thing. He refers to the dive in Southern California housing prices, which some put at 25% since the 1989-90 peak, as a desirable correction in the market that will allow values to begin to grow again more in sync with local salaries. The real estate situation isn't "getting bad," he said. "It's just getting real."

Although Westsiders, especially those who bought at the apex, now worry about shrinking equity the way they once worried about cellulite, a growing number are taking advantage of depressed prices and record low interest rates to buy the newly affordable home of their dreams.

Donna and Michael Bray recently sold their Rancho Park house for "$400,000-plus" and bought in Westwood for "between $550,000 and $600,000," she said. As Donna Bray, who works for Great Western Investment Management, explained, they had purchased the Rancho Park house in 1980 for $227,000 and had accumulated substantial equity despite the recent fall in property values. It sold in three months, less time than she had anticipated.

Great Western has an employee loan program that allowed the Brays to get a mortgage at even less than the going rate. Their new house, a two-story original Spanish-style, has everything they wanted, including a small yard.

Bray said she isn't wasting time fretting about whether they bought at the absolute bottom of the market. "If prices go down a little bit, I'm not worried because we're not moving," she said.

Recovery, if that indeed is what is happening, is not happening at the same pace in every community. Wynn said the market is especially brisk for entry-level houses in Mar Vista Hill and Westside Village, adjacent to Rancho Park. And because prices have fallen dramatically in recent years, more and more clients are able to afford Rancho Park and Westwood. Dozens of homes have sold for $290,000 to $360,000 in these two prime areas, Wynn said. "We're talking small homes, say, two bedrooms, 1,200 square feet, but we're also talking about neighborhoods that are delightful."

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