What's to make of the Los Angeles housing market?

Simply put, it depends upon whom you ask: either it's already on its way to recovery or has yet to experience its correction.

After months of seeing year-over-year declines in volume that failed to topple prices, November was more of the same and then some.

Sales in L.A. County ground to a halt, falling 39 percent compared to last November, with just 5,884 housing units changing hands. That marked the largest drop in volume since sales began to decline in February, according to data provided to the Business Journal by HomeData Corp., a Melville, N.Y. company that tracks housing prices nationwide.

But all that torpor in the market failed to put a dent in prices. In fact, median prices rose to $550,000, 4.5 percent greater than last November when they were $525,000 and $5,000 more than October. Still, the increase wasn't much to speak of, since prices have sat in the $545,000 to $555,000 range since April.

All in all, the data have real estate industry insiders suggesting that the feared big drop in the market may never come, and the correction may already have happened.

"We have taken the brunt of the decline in 2006," said Leslie Appleton-Young, the California Association of Realtors' chief economist. "We aren't expecting any precipitous decline."

But not everyone agrees.

Clearly among the chief dynamics: homeowners who may want to sell but are unwilling to accept lowball offers from buyers and are sitting tight if they can. And many can, given the strength of the state and local housing market.

The Los Angeles County unemployment rate plunged to a 30-year low of 4.3 percent in October, with the county gaining 17,000 jobs to close in on an all-time high, according to the state Employment Development Department.

Contrast that with the early 1990s when the last real estate boom ended with a disastrous drop in prices that saw many homeowners lose their homes in foreclosure. But that correction coincided with a huge pullback in defense spending following the end of the Cold War, with the county losing thousands of defense-related jobs.

Then there's the issue of mortgage rates. Six months ago the fear was that rates were headed upward enough to cause mortgages with adjustable rates to become unaffordable but last week 30-year fixed-rate mortgages averaged 6.11 percent, the lowest since January when they were 6.1 percent.

Still, pessimistic observers maintain that a correction is coming, though it may be gradual.

"There will be a slow sag over the next couple of years," said Dowell Myers, professor of policy planning and development at University of Southern California. "That's good news it could have been a bigger decline."

Corrected expectations

Indeed, on the ground, several brokers said they have noticed a shift in thinking, as buyers have realized there is likely going to be no repeat of the fire sale mentality that characterized the early 1990s.

"In the last couple of months it has picked up," said Natalie Neith, a broker with Prudential California Realty in the company's Hancock Park office.

Also helping, Neith said, are sellers who have finally understood that the days of significant appreciation of their property is over. "Sellers are finally getting the picture that it's a different market," she said.

Still with buyers continuing to expect some sort of price decline, the overall effect has been a dampening of sales.

The California Association of Realtors reports that the time it would take to sell all the homes now on the market rose to 8.9 months in October, up from 8.3 months in September and 4.3 months a year earlier. Agents say a healthy market in equilibrium generally has about a six-month supply of homes. Also, homes are sitting on the market an average of 49.9 days, compared to 26 days a year ago.

Indeed, price declines in specific neighborhoods are boosting hopes among would-be buyers that more declines will follow.

In the tony Beverly Hills 90210 ZIP code, sales were down 83 percent, with just two homes sold for a median price of $1.97 million, off 6 percent. And in the 90254 Hermosa Beach ZIP code, sales were down 68 percent, with just eight homes sold and a median price drop to $1.07 million, off 11 percent.

However, some markets, especially more reasonably priced ones, continued to show sales increases in November.

In the Highland Park 90042 ZIP code, sales increased by 5.3 percent, with 40 homes sold and the median price rising 12 percent to $549,000. And in the Canoga Park 91303 ZIP code, sales were up 42 percent, with 17 homes sold, though the median price was down 3 percent to $555,000.

Steve White, president of the Southland Regional Association of Realtors, is convinced that the market is on the rebound. Though his association reported a 0.8 percent median price decline in the San Fernando Valley for November, he dismissed that data, calling the roughly $5,000 decline to $595,000 "so miniscule" as to be irrelevant.

More important to White are Valley inventory levels that are down to 5.7 months, in stark contrast to past years when inventory levels rose at this time of year as families settled down for the school year.

"What I am hearing from our members, is that they're surprised," White said. "They are in multiple offer situations."

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