Great Expectations Fizzle as Valley Home Prices Lag

More houses sold in the San Fernando Valley in 1996 than the previous year, and condominium sales hit their highest point since 1990. But prices remained in a deep trough, according to a report released Monday by the San Fernando Valley Assn. of Realtors.

The report shows that 1996, which many in the industry hoped would be a comeback year, instead fizzled into the lackluster market that has been the pattern for the last several years.

Prices started out low and got lower, with the median price of single-family homes dipping to under $150,000 for the first time in a decade.

Sales increased over 1995’s totals, but not by much; 1994 was actually a better year for single-family home sales than 1996.

“Have we hit bottom this time? Well, you’ve heard that before,” said Mel Wilson, the new president of the Realtors association, adopting the more cautious tone that Realtors have taken since the hoped-for turnaround failed to show.

But although 1996 prices were disappointing, Wilson sees a change in fortunes in ‘97, especially in homes priced in the mid-range above $200,000. “Interest rates are stable, the job market is holding on, trade is expanding . . . and we have had the lowest inventory that we have had in five or six years,” he said.

A total of 10,519 single-family homes closed escrow in the Valley in 1996, up 8% from 9,775 in 1995, according to the group, which tracks sales based on reports from its 6,800 members from North Hollywood to Calabasas.

In December alone, 872 homes sold, up 11% from December 1995 and about even with the November total.

The median price of a single-family Valley home--the price at which half the homes sold for more and half for less--dipped to $149,167 in 1996, down 11% from $166,958 the previous year and 37% from the peak of $236,958 in 1989.

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The average price of a single-family home was $217,325, down slightly from $218,342 in 1995 and off 27% from the peak of $296,675 in 1990.

Prices lagged especially in November and December, dragging down the yearly totals. The December median price for a single-family home in the Valley was $138,500, a steep 19% decline from $170,000 in December 1995, and only slightly above the November figure of $135,000.

The December average price was $212,700, slightly below the average of the year earlier.

Condominiums have been selling apace for months, but their prices are still dropping.

A total of 2,939 condominiums closed escrow in the Valley in 1996, a 50% increase from 1995’s total of 1,958.

The median price of a Valley condominium, $85,418, was 12% lower than the 1995 median of $97,100. The average price of a Valley condominium was $103,017 in 1996, down 3% from $106,067.

The trends continued to work in favor of first-time buyers, who generated most of the market activity in 1996, Wilson said. And a boom in high-paying entertainment industry jobs helps explain a flutter of life at the high end of the market, among homes priced at $500,000 or more.

But a large middle segment of the market remained moribund. And year-to-date foreclosures in the Valley took an unexpected 15% leap in 1996 from 1995, according to analyst Nima Nattagh of Experian, an Anaheim-based real estate information company.

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Foreclosed homes are thought to depress prices, although Nattagh cautioned that the effect is not great, with most foreclosed homes selling only a handful of percentage points below market values.

On the whole, from the Realtors’ point of view, the best that could be said of the market in ’96 is that the precipitous slide that began with the recession at least slowed.

For many, that’s reason enough to rekindle optimism. “The signs all point to 1997 being a comeback,” said Bernie Leibovitch, a Northridge real estate agent who says he recently represented a buyer in a four-way bidding competition for a home--until recently, a rare event in the Valley.

But even if prices stop their descent, “the fundamentals of the market are still not there,” cautioned Nattagh. “If homeowners expect values to appreciate, I think they will be disappointed.”

By the end of this year “perhaps the values declines will stop . . . but that’s a far cry from appreciating,” he added.