Sales of existing single-family homes and condo sales increased during August a combined 7 percent, the Southland Regional Association of Realtors reported on Monday, Sept. 28.
A total of 670 single-family homes changed owners last month, up four sales or 1 percent from 12 months ago. It was the 14th consecutive month that the monthly tally was higher than the prior year.
After lagging for months, condominium sales took off during August with the 230 closed condo escrows the second highest total for the year. At a time of year when sales activity typically begins to wane, the condominium tally was up 13.3 percent from a year ago.
"The emphasis in this recovery so far has been on single-family homes, so it was a nice surprise to see buyers finally recognizing the value in condominiums," said Ana Maria Colon, president of the Southland Regional Association of Realtors.
As an example of what's currently happening in the market, Colon focused on a townhouse located in Sylmar that was bank owned and recently listed for sale for $119,500.
"Multiple offers flooded in, all above list price, with some as high as $175,000," she said. "The bank accepted an all-cash offer, turning down higher offers that would have required financing."
All-cash offers obviously have a huge advantage, said Jim Link, the Association's chief executive officer, because obtaining financing remains difficult, especially if a buyer has a limited down payment.
"It will take a 20 percent or higher down payment to get lenders even a little excited," Link said. "Otherwise, lenders will make buyers jump numerous hurdles."
Link and Colon agreed that current demand for housing could absorb many more homes, but a lack of inventory is a brake on sales. The active inventory at the end of August stood at 3,045 listings, down 52.8 percent from a year ago.
That was is a mere 3.4-month supply at the current pace of sales, compared to the 7.7-month supply of a year ago August. A balanced market — where neither buyers nor sellers hold an advantage — appears when the inventory is around a 5- to 6-month supply.
Link and Colon also agreed that with the state's moratorium drawing to a close at the end of September the market most likely will be able to absorb any added inventory.
The median price of single-family homes sold last month was $389,000, off 8.5 percent from a year ago. For the last 10 months the median has been bouncing between the low point of $339,900, hit this February, and $400,000, which came this July.
August was the second consecutive month that saw the year-to-year drop come in at a mere single-digit number after 19 consecutive months of double-digit drops – including a 37.1 plunge in September 2008.
"The inventory is so tight that if a property is priced under $400,000, has three bedrooms and two bathroom, I can guarantee that there is a buyer for it right now," Colon said.
The condominium median price of $230,000 was down 16.4 percent from a year ago. After 19 months of double-digit declines – the worst being 48.4 percent this January – condo activity appears to be picking up and, like single-family homes, the median price appears to be stabilizing.
Even as traditional seasonal factors begin to come into play, pending escrows – a measure of future resale activity – suggest that the market will remain active through the coming months. There were 1,307 open escrows at the end of August, up 7.3 percent from a year ago.
"Buyers already prodded by favorable prices also are racing to snag the $8,000 federal tax credit that currently is set to expire at the end of November," Link said. "There's talk of extending it and we think that would be a good thing."
Unless the tax credit is extended, Link and Colon said buyers may not have enough time to take advantage of it because under current provisions escrows must close by Nov. 30 for a buyer to qualify.
The Southland Regional Association of Realtors® is a local trade association with more than 10,000 members serving the San Fernando and Santa Clarita valleys. SRAR is one of the largest local associations in the nation.