Fewer homes sold in February in Los Angeles County than in any month in more than three years.

The 3,661 homes that sold in February represented a drop of 31 percent from the same month a year ago, according to HomeData Corp. HomeData, of Melville, N.Y., tracks housing prices nationally and has been providing local data to the Business Journal each month for more than three years.

"We probably haven't seen this since about 1999," said Delores Conway, director of the Casden Real Estate Economics Forecast at the USC Lusk Center for Real Estate. "On the other hand it has been lower, for example during the 1991 recession."

February is usually a slow month. The previous low in the last three years 5,309 homes sold was in February 2006.

But the 31 percent year-over-year decline is more than some industry experts were expecting. What's more, recent news of local subprime mortgage lenders running into trouble indicates financially stretched home buyers are increasingly unable to make good on more exotic home loans. Such loans include Option ARMs that allow for negative amortization of the principal but only up to a point.

"There is a spike in foreclosures in Southern California as in other areas," said Glenn Goldan, a member of the board of directors of the California Mortgage Association, a nonprofit trade association. "But they are limited to a type of borrower who had taken a certain type of loan where they leveraged too high."

The sales slowdown also was reflected in the time it would take to sell all the homes currently on the market. February figures are not yet available, but the California Association of Realtors reports that in January the figure was up to 10 months, from 7.3 months in December. The figure was just 6.2 months in January 2006. Experts say a healthy market in equilibrium generally has about a six-month supply of homes.

Also, as of the fourth quarter 2006, homes were sitting on the market an average of 63 days before they sold, compared to 28 days for the same period a year earlier.

Still, the sales slowdown and foreclosures did not much affect the median price, which was $550,000 in February. Prices have been stuck at or near that $550,000 level for 11 straight months in L.A. County. The price was up $1,000 from the previous month and up 4.8 percent from the same month a year earlier.

Some anecdotal evidence suggests that activity is picking up, at least in the higher end of the market.

Stan Richman, manager of the Beverly Hills office of Coldwell Banker Residential Brokerage, which handles sales from Hancock Park to Malibu, said his office had 41 homes that drew multiple offers in February.

Richman said he knew of one West Los Angeles home that received 57 offers after being listed at $1.2 million. It eventually sold for $1.5 million.

"It's much different than 2006, where in the second half we didn't have anything," Richman said. "It is dramatically different."

Nevertheless, the implosion in the subprime lending market last week does not bode well for the national or local housing markets.

Santa Monica-based Fremont General Corp. suddenly closed down its subprime unit due to bad loans that prompted regulators' attention. And there were concerns that Irvine-based New Century Mortgage Corp. could be forced into bankruptcy, though those fears eased somewhat as the week progressed as buyers expressed interest in taking over the ailing units.

And Conway said the inevitable tightening of credit terms that has followed problems in the housing market has made it more difficult for some prospective homebuyers to qualify for loans. As a result, these people have been "taken out of the market," helping to explain the volume declines of the last few months.

Robert Kleinhenz, deputy chief economist for the California Association of Realtors, agreed that rising inventory due to slow sales is starting to hurt the market.

"Over the past few months we've seen an increase in inventory in L.A. County and those increases in inventory are beginning to show up in terms of sales and probably in terms of prices as well," Kleinhenz said.

Richman said his Coldwell Banker office now handles 10 to 20 homes a month that banks are selling because of foreclosures.

But as in past months, the county's overall housing picture remained cloudy, with some areas doing far better than others, according to HomeData.

For example, volume was down 71 percent to four homes sold in the Beverly Hills 90210 ZIP code, with the median price off 17 percent to $1.6 million. At the same time, in the Malibu 90265 ZIP code, volume was up 22 percent to 11 homes sold, though the median price dropped 19 percent to $2.3 million.

There is also a widespread consensus that the strength of the local economy should prevent any collapse in the housing market, as occurred in the first half of the 1990s due to federal defense cuts that decimated the local aerospace sector.

The county unemployment rate was just 4.6 percent in January and showed strength in a variety of sectors, according to the state Employment Development Department.

"We are starting to see an increase in foreclosures but as long as the job market remains healthy, then we expect the markets to be able to adjust," Conway said.

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