Single-family home and condominium sales throughout the San Fernando Valley during 2009 handily surpassed totals reported in 2008 as the most favorable resale prices in years, federal tax credits and low interest rates attracted legions of buyers eager to benefit from a unique moment in time, the Southland Regional Association of Realtors reported on Thursday, Jan. 28.
The 7,793 single-family home sold last year were 9.9 percent higher than 2008. It marked the second consecutive year that sales increased after four consecutive years of annual drops beginning in 2004.
Likewise, after six consecutive years of declines in condominium sales, 2009 ended with 2,494 condos changing owners. That number was up 15.4 percent over the prior year.
The 10,287 sales negotiated by San Fernando Valley Realtors contributed $4.2 billion to the local economy, not including the additional sales, ranging from furniture and appliances to remodeling and landscaping, that each sale typically generates.
"This is the opportunity market for many people who have been sitting on the sidelines," said Patti Petralia, the 2010 president of the Southland Regional Association of Realtors. "There is enough pent-up demand that I sense that the entry level market is still going to be very strong as we move into the New Year."
Petralia and Jim Link, the Association's chief executive officer, were guardedly optimistic that 2010 will be a stabilizing, active year for local real estate, barring any unforeseen changes in the economy.
"While the tide has turned," Link said, "we're still not where we'd like to be due to the continued presences of short pays, a dwindling number of foreclosures, and an overall lack of inventory. Still, we're certainly past the worst of the residential real estate recession "
The number of foreclosures is down, but some analysts believe banks have what is called a "shadow inventory" of foreclosed properties that could be released sometime this year, an inventory that Link and Petralia said current demand could absorb.
Virtually every property listed below $500,000 receives multiple offers that typically are higher than the list price simple because there are not enough properties listed to meet demand.
The 2,667 active listings at the end of December were down 44.6 percent from a year ago. At the current pace of sales, the inventory represents a 3.1-month supply, down from a 5.20-month supply a year ago. A balanced market emerges when the supply hovers between a 5- and 6-month supply.
The lack of inventory stopped the slide in the median price of single-family, which bottomed out in February at $339,900 and has been climbing ever since, posting a $400,000 median price in December.
While prices have been climbing higher on a month-to-month basis, the annual median price posted a decline compared to the prior year. The annual median price of single-family homes for 2009 was $372,483, down 14.6 percent from 2008 for the second consecutive year of declines. In 2008 the annual median of $435,687 was down 26.6 percent from the 2007 record-high annual median of $611,933.
Similarly, the condominium annual median price fell for the third consecutive year during 2009. The year ended with a condo median of $218,650, down 22.6 percent from 2008. The record high annual condo median of $394,917 was set in 2006.
It has taken longer for condo prices to stabilize as buyers focused on the unique opportunities presented to purchase single-family homes, Link said. The condo median hit its low point of this cycle in January 2009 with a median of $190,000. The year ended with the December median price at $240,000.
While it varies from lender to lender, with some adhering to stricter rules than others, Petralia said home loans are more available than a few months ago.
"It depends on the borrower," she said. "Getting a loan might take longer, there may be more eyeballs scanning every document, but loans are available if the borrower has good credit and good documentation."
Link said the lending industry is slowing adjusting although some are being overly cautious.
"What is being sorted out now was an over correction," Link said. "Not long ago, lenders too quickly gave money to people who didn't qualify. Now they sometimes are too slow to lend to those who do qualify."
Pending escrows, a measure of future sales activity, were up 2.8 percent over a year ago, suggesting that the revived market will continue for months to come.
"It's all good news compared to a year ago," Petralia said.
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.