Local residential property values will always roar back stronger than ever.

LAST spring, I wrote an opinion piece for the Business Journal arguing that it remained a good time to buy real estate in the Los Angeles area. I also cautioned there would be an inevitable adjustment in the market. In the past six months, the market has changed dramatically. The credit market has tightened and home sales have slowed. Nevertheless, I submit that it remains an opportune time to buy real estate in Southern California. There's a very basic reason for my assertion: Every time the market has receded, it has always roared back stronger than ever.

Nationally, we've seen declining home prices for the past 18 months and more homes available for sale. When an individual area has a supply of existing homes on the market for six consecutive months, it is considered a buyers' market. Currently, there is over a 10month supply of available homes in the U.S.

Moreover, markets differ dramatically region-to-region. Detroit and parts of Florida face a much more difficult challenge in returning to a more normal market than Los Angeles. Building booms and weak economies impede recovery in those areas. However, here in Los Angeles, we have a significantly stronger economy, although one that has slowed over the past year.

Prices have come down in almost every region. But I would argue they adjusted to a more sustainable and realistic level. However, it is important to remember that home prices will not plateau forever, especially in Los Angeles. Indeed, we are already seeing signs that in more resilient areas prices have stabilized and will likely begin to increase in 2008 or 2009.

As in previous real estate corrections, some areas are more resilient to downward fluctuations than others. Neighborhoods in high demand and with limited areas in which to build have fared much better these past few months. These include many parts of the Los Angeles area--like the Westside and beach communities.

For example, a two-bedroom, two-bath home that likely would sell for $600,000 to $700,000 in less sought-after areas is still fetching over $1 million in West Los Angeles.

Admittedly, a few years ago, that same house probably would have been listed at $1.1 million, but there's little doubt it will command that price level again in the near future.

Financing issue

Of course, regardless of the price-range of a home, most of us still need to finance the purchase. It's true, since this past August credit guidelines for lending have become extremely tight. The tight credit standards are a reaction to a period of too-loose standards in which many subprime loans were made to borrowers, who, frankly, should not have received the loans. This has caused lenders to be much more stringent regarding borrowers' qualifications across the lending spectrum.

Nevertheless, we must remember that credit remains available. And financing is already returning to more appropriate standards, thanks in part to the recent moves by the Federal Reserve Bank.

In today's market, lenders are looking for qualified buyers. Borrowers with credit scores over 700, who have verifiable income and available assets for a down payment are getting their loans funded. We've also seen a much-needed improvement in so-called "jumbo" loans--those loans over $417,000, which are common in L.A. and other metropolitan areas. Just a few weeks ago, the news stories made it seem as if these loans had all but disappeared or were priced unreasonably. But as some lenders have effectively removed themselves from this market, others have moved in, and "jumbo" loans are once again being funded and at competitive rates.

The most compelling argument for buying a home in L.A. during any type of market remains that homes here increase in value over time. Whereas no one can predict the future, history has proven time and again that in the long term, owning real estate in desirable areas of Los Angeles is one of the best investments you can make. The key is recognizing opportunity and striking when the iron is hot.

Mark Cohen is president of Cohen Financial Group, a Beverly Hills-based loan origination firm.