The median price of homes that sold in Los Angeles County in January dipped below $500,000 – the first time in more than two and a half years that the price was below that threshold.

January’s median price – $496,000 – was 9.7 percent less than the same month last year, according to data provided to the Business Journal by HomeData Corp. of Melville, N.Y. It also was 3 percent lower than the previous month’s median.

What’s more, the number of homes sold declined. A total of 3,379 homes changed hands in January, 38 percent fewer than January 2007. It was less than half the number that sold two Januarys ago in the county.

The downturn has been widely attributed to the subprime housing meltdown, which first rocked the local market last summer, causing banks to tighten their lending criteria, freezing many potential buyers out of the marketplace. And as variable-rate loans have adjusted up, homeowners have defaulted on payments and foreclosed properties have popped up.

The big questions now, of course, are how far down will the market slide and how long will it take. Although a few believe the market will turn around soon, several local experts said they’re braced for more bad news in the coming months.

“I think slowly but surely it is going to get worse,” said Mark Wollman, a residential broker for Hilton & Hyland, a Beverly Hills brokerage. “I think people are really going to start to understand what’s happening this summer.”

Jerry Nickelsburg, an economist with the widely referenced UCLA Anderson Forecast, believes the bottom may be hit as early as midyear, when the median could decline 20 percent from its high. Prices are now off 15 percent from their high.

“What is significant is that we went for a fair amount of time where the median price was not falling; it was rising in spite of the soft market. Owner-occupied housing takes a longer time to respond to a soft market because people base their expectations on what they’ve seen houses sell for,” he said. “Now we are seeing home prices come down. The market is finding its equilibrium.”

The last time the median price was below the half-million-dollar level in L.A. County was in May 2005, when it was $475,000. The following month it was $501,000 – the first of 31 consecutive months in which the price was greater than $500,000.

The median price peaked at $585,000 in May and again in July. In October, the price sunk to $525,000 – and it was the first year-to-year sales decline in the current downturn.

Midmarket misery

The portion of the market that has been most impacted in recent months is the midrange, where homes sell for prices between $500,000 and $1 million. That’s because those prices are in the range of jumbo loans, which are greater than $417,000. Lenders have become cautious about making those kinds of loans because they are difficult to sell.