Economy continues to crumble

GLENDALE — Home prices in the region fell slightly in August while sales of new homes decreased for the first time in six months as officials continue to notice the slow decline of a once bursting housing market that could be correcting itself after a prolonged period of increased home values.

In Glendale, the average price for a single-family home fell about 11% in August to $614,500. The average price for a home in La Crescenta dropped 14.1% to $599,000 while the price of an average single-family home in Montrose shot up 9.6% to $655,000, according to local Realtors and DataQuick Information Systems, a La Jolla-based market research firm.

“That’s a good thing because it gets more affordable for young people . . . who want to live in Glendale,” said Eduardo Martinez, an economist with the Los Angeles Economic Development Corp.

The news was accompanied by information from DataQuick and other regional housing research firms that found that sales of existing single-family homes increased in both July and August as buyers continue to take advantage of falling prices.

But new home purchases for July fell by 6.2%, the first such decrease in six months, according to First American CoreLogic, which provides housing market analysis on regions throughout the nation.

“With property values going down across the board, people have less home equity built up so that reduces the amount of buyers you’re going to have in the local races, like Glendale, even further,” Martinez said. “For the local level, you’ve got a lot of people sitting on the sideline just waiting to see when the housing situation is going to bottom out . . . which causes values to go down.”

While prices dipped, foreclosures in the region rose slightly in July as compared to the same period last year, officials with First American CoreLogic said. The rate of homes foreclosed in the Los Angeles-Long Beach-Glendale area inched up 1.2% in July.

The dwindling number of foreclosures reflect the increased financial situation of banking institutions that are experiencing fiscal turmoil on their end, Martinez said.

“In a market where prices keep on coming down, there’s a pretty good chance [banks] are not going to get too much of a profit if at all so they want to minimize their losses,” he said.

The financial turmoil has claimed, among others, global investment bank Lehman Brothers, insurance giant AIG and resulted in a proposed $700 billion bailout from President George W. Bush, who has asked Congress to accept the plan he hopes will prop up the nation’s crumbling economic foundation.

“When the news is unbearably bad, we should be close to the bottom,” said Kendyl Young, a Realtor with Coldwell Banker in Glendale. “This is very different than the last difficult market in the early ’90s.”

Still, Young was hesitant to say if housing prices have yet to reach their lowest point, preferring to let the market dictate its own economic sentiment.

“Time will tell,” she said.