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It Can Only Go Up From Here : The Antelope Valley's Depressed Housing Market May Be Ripe for a Rebound

July 05, 1994|JOHN CHANDLER | TIMES STAFF WRITER

After a five-year fall from its dizzying heights of the late 1980s, the Antelope Valley's housing market still holds an abundance of misery for property owners. But signs are emerging that the worst days may have passed or soon will.

Because home values have fallen nearly 30% on average since the market peaked in 1989 and 1990, thousands of families who bought in the high desert area then are stuck with houses that are worth less than their mortgages.

That has made moves difficult, even when prompted by job losses, transfers or divorces. Many owners couldn't pay their mortgages. Some just walked away from properties. The result has been record numbers of foreclosures and abandoned homes, creating blight and further depressing the housing market.

"Forget the recession. It's been a depression," said Richard Cook, a real estate agent at Troth Realtors in Lancaster. To cope, Walt Troth, one of the owners, said his office has shifted to specializing in re-marketing foreclosed properties.

In an indication of how much the market has deteriorated, foreclosures in the Antelope Valley so far this year are outnumbering sales reported by local realtors. Total annual sales fell by more than half from 1989 to 1993. In addition to the loss in value for current homeowners, median sales prices for new houses have fallen by nearly 23% since 1989.

There may be some light on the horizon, however. Like elsewhere, Antelope Valley housing prices have stabilized this spring after a long decline. And local realtor boards reported their highest number of resales in more than three years this spring, although many were of foreclosed properties.

The collapse of the Antelope Valley market also has restored affordability--the factor that made housing in the area such a hot commodity in the late 1980s, when buyers who were priced out of other communities flocked to Lancaster and Palmdale. As a result, experts say, newcomers to the region can expect the best housing prices in years in a market that most predict will slowly rebound.

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That's cold comfort for those who bought homes when the market was at its peak, however. While they may not lose any more value on their houses, they shouldn't expect to recoup their severe declines anytime soon, experts said.

David Feller knows that story all too well. The 32-year-old communications company manager and his wife bought a new four-bedroom, two-bath home in the upscale Quartz Hill area for $210,000 in February, 1990, when the market was near its peak.

Payments were manageable at first, but then a growing family and financial problems necessitated lowering the payments or moving. Feller spent months trying to refinance his loan at a lower interest rate, but the lender refused, saying the $180,000 he owed far exceeded the then-current value of the house.

Today, Feller has a potential buyer willing to pay $130,000 for the house, 38% less than Feller's purchase price. But the lender has yet to approve the sale. Such sales are called short pays, because the lender is not fully repaid. Some lenders permit them to avoid foreclosures, others do not.

In the meantime Feller waits, knowing regardless of what happens he probably has lost his home and $20,000 down payment. "We got screwed. This is our worst concern," Feller said of the dramatic decline in local real estate values. Like other hard-hit residents, Feller said he sees no sign of a recovery coming despite the experts' predictions.

His situation is not unique. His builder, Calabasas-based Griffin Homes, went bankrupt and was liquidated last August. A neighbor, despite getting a lower purchase price than Feller, went through foreclosure when the market collapsed. The family that bought Feller's former home in Lancaster lost it. And a friend involved in a divorce may face the same prospect, Feller said.

Throughout the Antelope Valley, a 1,300-square-mile area of north Los Angeles County with nearly 300,000 residents, home resales this spring suffered a 28% loss in price for the same properties in 1990, according to TRW REDI Property Data, a company that tracks real estate. (A separate analysis by Dataquick Information Systems showed smaller median price declines, but did not necessarily compare the same properties.)

Median prices for new homes fell from $167,950 in late 1989 to $129,990 this spring, a smaller 23% drop, according to the Meyers Group, another tracking firm.

For most Antelope Valley residents who made 5% to 20% down payments on houses in the late 1980s, the declines have been more than enough to wipe out their equity and leave them "upside down" in their homes. That's the real estate term for owing more than your property is worth.

If owners can stay put and continue to make payments, they suffer no direct loss and can wait for values to return, real estate experts said. But upside-down owners who need to move, sell or refinance face trouble, and that has led to the foreclosures.

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