It's a buyers market for Southern California real estate; and that's especially true in the local mountains. Prices are down and supply is up, fueled largely by foreclosures on the market. KPCC's Special Correspondent Kitty Felde says if you're looking for a bargain, head for the hills.
Kitty Felde: Karen O'Brien at ERA Bruin Trojan Realtors in Running Springs has been selling property in the mountains for nearly 30 years. She says the days of multiple offers and homes that sold in a week are over. But there's a change in the air.
Karen O'Brien: Volume has definitely picked up up here recently, and I think it's just price-oriented.
Felde: It used to be that most of the cottages and cabins in the local mountains were vacation homes. But today, about 60 percent of mountain homeowners live there fulltime. O'Brien says her primary customer is the first-time homebuyer, someone looking for a two-bedroom house for under $200,000.
And that buyer can find it in the mountains. According to DataQuick, prices in the Lake Arrowhead area have dropped more than a third in the past year. The reason? Foreclosures. O'Brien says half the houses she sells these days are foreclosures.
O'Brien: This is typical of a bank-owned property.
Felde: Rose Wiegand has been selling real estate in the Crestline/Lake Arrowhead area for more than 10 years.
Rose Wiegand: And we're gonna climb some stairs.
Felde: This three-bedroom house has a steeple wood ceiling and a fabulous view of Lake Gregory. But like a lot of foreclosures, it may not look like anyone's dream home.
Wiegand: The wood decks usually need work done on it. You're gonna see a couple broken stairs, so do be careful. We've got to climb two flights of stairs. (dogs bark) So here we go. I've had some where – in fact, one of the houses we may visit – the previous owner, to be nasty – watch out, this is sticky – cut a deck board, and it looked like it was stable, and–
Felde: He cut what?
Wiegand: He cut a deck board, so whoever walked on it was gonna fall through. So when you're visiting, you have to be careful, because some of the previous owners beat the house up. OK, here's another broken stair.
Felde: Wiegand owns Crestline Real Estate. Right now, all her sales are foreclosures. She's just started Saturday foreclosure tours, showing about half-a-dozen clients eight properties in a single day. This particular house is on this week's tour. It's listed at $260,000... for now.
Wiegand: They've been dropping the price $30,000 every month, which is really keeping up with declining values, about 1 percent a month.
Felde: The flood of foreclosures has created problems for homeowners who want to sell. They can't afford to price their properties for less than the cut-rate deals banks offer on foreclosures. Carol Banner has been with Coldwell Banker Skyridge Realty in Blue Jay for 25 years. She remembers the last real estate slump.
Carol Banner: This time, we have a lot more people expecting to be able to get a home for nothing, for no down payment, seller pays all your closing costs. That's what's been sold to people. And that expectation I don't believe was there in the '90s.
Felde: Banner also says her clients today are ready and able to buy right now. She says she doesn't see the kind of homebuyer who needed a subprime boost anymore.
Banner: I think that the people who understand that they may be marginal probably aren't in the marketplace. You know, I think they've been kind of scared off. Why bother? Most of the people with whom I deal, you know, I'm seeing a lot of cash out there.
Felde: Realtor Karen O'Brien says last fall's fire hasn't deterred those homebuyers either. In fact, some who lost homes in Cedar Glen decided to buy a new one rather then rebuild. The key, she says, is price.
O'Brien: Everything has to be priced right. I don't care what kind of a market you're in, it's pricing. And people are shopping. Oh, it's wonderful. It's a great time to buy. Great time to buy.
Felde: And it will be for a long time to come. Karen O'Brien predicts there'll be plenty of foreclosure properties for sale in the mountain areas well into next year.