In a sign that the local housing marketing is beginning to rebound, sales in the San Fernando Valley of existing single-family homes increased during April for the fourth consecutive month and posted the first year-to-year gain in 30 months, the Southland Regional Association of Realtors reported.
Not since September 2005 has the monthly total been higher than the prior year. The 547 sales closed by Realtors during April was up dramatically compared to April 2007 - 100 transactions or 22.4 percent higher.
The April total also was 31.5 percent above March and has climbed each month since January, gaining momentum as the traditional Spring home buying season gets underway and as lenders start writing loans again.
‘There’s plenty of pent-up demand for homes, which will drive sales higher even as prices remain soft and the system continues to eliminate foreclosures and short-pays, which may take many months to work out completely," said Mary Funk, president of the Southland Regional Association of Realtors. "Buyers are slowly awakening to the opportunities while lenders are gradually unveiling affordable loans."
With the emphasis on single-family homes now that they are within reach of more people than at any time in many years, condominium resale activity has yet to pick up. Condo sales are coming slower not for lack of a wide selection, but because first-time buyers generally have a more difficult time coming up with a down payment and qualifying under today’s tougher loan restrictions. Condominium sales during April were down 16.6 percent from the prior year and off 3.3 percent from the March tally. Condo sales have yet to exceed prior year figures even though resale prices have been falling.
The condominium median price of $300,000 was down 24.1 percent from a year ago and off 4.8 percent from March. The condo median price peaked at the record high of $415,000 in February 2006, but have been trending downward since July of 2007 and started a more precipitous decline in November.
Single-family home prices hit the record high of $655,000 in June of last year but have been inching lower at a much slower pace than condos. Last month the median came in at $465,000, down 25.6 percent from the prior year and off 1.1 percent from March. That was only the second time in this cycle that the price decline was above 20 percent.
"It’s impossible to say where prices will settle until all foreclosures and short-pays are gone," said Jim Link, the Association’s chief executive officer.
"But multiple factors argue against steep declines in single-family home prices:" Link said, "pent-up demand, an inventory that offers a good selection yet is not excessive, assistance for some beleaguered home owners that will keep more homes off the market, and a higher conforming loan limit, which makes jumbo loans affordable to a larger number of prospective buyers."
The Association reported a total of 7,234 active listings at the end of April, up 34.0 percent from a year ago.
However, at the current pace of sales, the inventory represents a 10.4-month supply, clearly a buyers’ market, but significantly lower than the 15- and 16-month supply of recent months or the record high 23-month supply set in February 1993. During the height of the recent sellers’ market, inventory frequently dipped below a 1-month supply. A balanced market appears around the 5- to 6-month range.
"Anyone interested in buying a home who is waiting for prices to fall off a cliff most likely will miss what may well be a small window of opportunity to get into the market," Link said. "More people can afford to buy a median priced home today than at any point in a decade, with one-third of families in Los Angeles County now earning enough to purchase an entry-level home.
I hope that trend continues for a long while," Link said, "but as more people jump into the market, the faster the best opportunities will vanish."
Pending escrows – a measure of future resale activity – suggest that April’s strong sales numbers likely will continue into summer. Open escrows, totaling 1,082 transaction, were down a modest 4.7 percent from a year ago, but increased on a month-to-month basis by 21.2 percent. April marked the first time in a year that the pending escrow total rose above the 1,000 benchmark.
"Has the market hit bottom? "No one can say with certainty where the market will be six months from now. But one thing is clear: right now, today, it is a buyers’ market."
