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Valley home market rapidly devaluing

September 25, 2008 12:00:00 AM PDT
A new report reveals just how dire the mortgage crisis has become. In the San Fernando Valley, home prices are almost at levels not seen since 2003.A Cal State Northridge economic study shows just how dire the real-estate market is in the San Fernando Valley. Prices in the Valley are up more than a third. It's like a store having a huge clearance sale -- 35 percent off, only the buyers aren't buying.

People in the midst of buying a home in the San Fernando Valley is becoming an increasingly rare occurrence. Craig South and Heather Kerns did a walkthrough in a home that real-estate agents say would have cost about $100,000 more just a year or two ago.

"If it went up even a dollar, we would have been out of our price range," said Craig South.

South and Kerns, as homebuyers, are members of an endangered species these days. Real-estate agent Karen Tobin describes a Valley real-estate market that is flat-lining.

"There's lots of properties on the market right now in the Valley, and I see them sitting on the market," said Tobin.

All across the country, fears of a financial meltdown are mounting. And home values are plummeting. According to the San Fernando Valley Economic Research Center, the median price of previously owned homes in the Valley cratered last month, from an average of $650,000 last August, to just $420,000; a difference of more than a quarter of a million dollars.

Bargain-basement prices may seem like the perfect buying atmosphere, but the turmoil on Wall Street has locked up the credit market, making mortgages extremely difficult to get.

Karen Tobin says buyers are either spooked by the economy, or waiting for the market to bottom out even more.

"I think people are just sitting on the fence going, 'I'm going to wait and see what happens; I don't want to get into this yet,'" said Tobin.

Meantime, mortgage failures are skyrocketing. Foreclosures in the Valley hit 923 last month alone, a jump of 219 percent from August 2007.

As for South and Kerns, they admit being a little skittish about making such a big investment amid such financial mayhem. But they're also excited about buying a house at such an affordable price.

"Are we insane for doing this right now?" asked South. "You know, you talk to people who say, 'If you wait six more months, it'll be no good,' and then you talk to another guy who says, 'You should have waited six more months.'"

No one knows what the real-estate market is going to do, though it seems as though buyers are betting that it has further to fall.

 

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