REAL ESTATE - Home sales fall 27% in Southland - Even most creditworthy borrowers are feeling the credit crunch.
Would-be home buyers in Southern California continued to sit on the sidelines last month, driving down home sales to their slowest pace in 12 years and pushing down prices in the region's less-expensive neighborhoods, data released Tuesday showed.
Yet even as home sales fell 27% regionwide, the median price of all homes sold in the Southland's six counties rose 3.7%, to $505,000, in July compared to a year ago, thanks to more robust sales at the upper end of the market, according to real estate research firm DataQuick Information Systems.
It's a phenomenon that has been occurring for much of the year: Homes priced above $750,000 have been attracting more buyers than homes in lower-cost neighborhoods, where many buyers have little or no down payment, irregular incomes or patchy credit histories.
But now with a global credit crunch starting to curtail loans to even the most creditworthy borrowers and the specter of inflation pumping up prices of consumer goods, local real estate watchers predict that even pricey areas could soon start to see prices tumble.
The thought of the housing market weakening further overwhelms sellers such as Gretchen Rolfe, a Mission Viejo psychologist. But when she starts feeling panicky she tries to soothe herself by baking cookies or playing with her two dogs, Snoodles and Snickers. Still, she says she has little choice but to sell the home she has owned for three years after her monthly mortgage payment jumped about 25% last spring and her refinancing options dried up.
"What can I do but try to manage my fear level the best I can?" Rolfe said, cuddling her mixed breed Snoodles in the airy family room of her four-bedroom, three-bath Mediterranean.
Another thing Rolfe has done is lower her asking price. Since listing her house in April, she has cut the price twice, the most recent reduction coming just last week after witnessing the turmoil in the stock and credit markets.
Now she has set a price range -- $725,000 to $775,000 -- to let any potential buyer know she will be a willing negotiator. Rolfe is counting on the recent jump in interest rates for so-called jumbo loans of over $417,000 to work in her favor. With the higher cost of borrowing, she figures, a prospective buyer who had been considering homes in the $800,000 to $900,000 price range might now select her house instead because they can afford less.
