Waiting this one out.

When my wife and I went house shopping last January, we settled on two houses in the same neighborhood in the Los Angeles area. The usual give-and-take began. I favored one house because it seemed more spacious and updated. My wife favored the second house because it was more charming and homey.

We went to a nice dinner with the aim of deciding which house to buy. But the conversation took a different turn. We got to talking about how both houses seemed pricey, even for L.A.'s overheated housing market. It occurred to us that all the houses we had looked at seemed overpriced. By the time we were half finished with our meal, the debate over spaciousness vs. hominess was off the table, so to speak. Instead, we had a different debate: buy vs. wait.

By the time the check came, we had reached our decision. We would wait. Otherwise, it seemed to us, we'd risk buying at the top of the market. What's more, we may be buying possibly as a recession was starting. Then again, maybe it was the big dinner check that scared us from spending more money.

Apparently, my wife and I are not the only would-be buyers who have taken a seat on the sidelines.

The Business Journal published an article last week that quantified what's going on. The number of homes sold in L.A. County in May was down 17 percent from the previous May. In fact, the number of homes sold was down in six of the last seven months. Year-to-date, sales are off 15 percent. That's a trend, folks.

Because of the slower sales, there's a bulge in the number of unsold homes sitting on the market. There was 5.6 months' worth of homes on the market in L.A. County in April, up from 2 months' worth the previous April, according to the California Association of Realtors.

It's easy to miss this trend. It's masked by the fact that prices continue going up. The countywide median price of the homes sold in May, $550,000, was 16 percent higher than a year earlier.

How can prices keep going up if sales are slowing? Well, I'm no real estate expert. But I have lived through a couple real estate cycles, and I know that price is often the last number to fall. It's not that unusual to see volume go down before prices turn south.

Sellers, after all, resist dropping their price. If they must hold onto their homes for a few more weeks or months to get their price, many will do exactly that. And that appears to be the stage we're in now: Sales have slowed, but sellers are holding firm on price.

But if sales continue to slow and the bulge of unsold homes continues to grow, it's all but inevitable that we'll see the next stage. The next stage is one in which prices fall.

How far prices will fall is the only real question. It's hard to believe that we'd see declines of 50 percent or more, despite the blather of the "housing bubble." But drops of 10 percent or so? Totally believable.

By the way, about six weeks ago, I drove by those two houses my wife and I liked. Both still had for-sale signs planted in their front yards. So much for the hot real estate market. Last week, I drove by them again. One was still for sale, albeit marked down in price nearly 5 percent.

Five percent? We'll wait some more.

Charles Crumpley is editor of the Business Journal. He can be reached at [e-mail].