Seasonal patterns combined with a severe shortage of properties listed for sale forced down home sales during February throughout the San Fernando Valley while the median price of homes sold increased 10.3 percent, the Southland Regional Association of Realtors reported on Friday, April 23.
Association executives expected the freshly approved expansion of a $10,000 tax credit for California homebuyers along with the ongoing federal credit of $8,000 to have an ongoing positive impact on sales. Plus, the Obama Administration on Thursday moved to speed home loan modifications for jobless owners, a move which could help millions of delinquent owners delay or stave off foreclosure.
"We are pleased that the Legislature and Gov. Schwarzenegger recognized the impact the tax credits have on families trying to buy a home," said Patti Petralia, president of the Southland Regional Association of Realtors. "Realtors led the effort to win approval for the $10,000 California credit. This comes just as the federal tax credit, which clearly has had a positive impact on sales, jobs and related purchases, is soon to expire.
"The housing market has been showing signs of recovery for many months," Petralia said. "However, these new developments come just in the nick of time, just as uncertainty was beginning to resurface. The California credit may be just what is needed to prompt anyone interested in buying a home to get off the fence and start house hunting."
Partly due to seasonal trends — activity typically tapers off during the rainy, short month of February — only 458 single-family homes closed escrow during February, 4.6 percent below the number reported a year ago. Condominiums faired better with the 190 closed escrows, up 17.3 percent from a year ago.
Home sales had been showing steady improvement since hitting the low point of this cycle in January of 2008. But activity has slowed in recent months.
"The primary force restricting sales is the exceptionally tight inventory," said Jim Link, the Association's chief executive officer. "Properties listed under $500,000 sell very quickly, which explains the boost in condo sales, while sales of higher-priced properties are improving."
However, ongoing difficulty qualifying for and securing home loans, especially jumbo loans needed to buy high-end homes, continue to be another drag on the market, Link said.
There were a total of 2,970 active listings throughout the San Fernando Valley at the end of February. That was 33.3 percent below the 4,451 listings of February 2009.
At the current pace of sales, the inventory represents a 4.6-month supply — just under the 5- to 6-month supply that represents a balanced market. A year ago the Association reported a 6.9-month inventory.
Link and Petralia noted that traditional sellers have been slow to list properties for sale due to market uncertainties while banks have been either slow to release properties obtained through foreclosure or have been developing strategies to help owners avoid foreclosure.
"A normal market won't return until traditional sellers feel confident enough to list their home for sale. A normal market will be elusive until foreclosed properties and short sales work their way through the system," Link said. "Short sales appear to be dominating current activity, yet even there it's taking way too long to get lender approval and conclude transactions.
"Realtors are hunting and hoping for consistency among lenders when it comes to short sales," Link said. "Buyers need to get loan approval in under 90 days, not the many months-long uncertainty that currently slows transactions."
The median price of the 458 homes that closed escrow during February was up 10.3 percent to $375,000. The median has been drifting up and down from $375,000 to $400,000 since last May, but has been trending ever higher since hitting the low point for this recession of $339,900 in February 2009.
The condominium median resale price of $227,000 was up 8.1 percent from February 2009. It has been higher than the prior year for the last five consecutive months.
Pending escrows — a measure of future sales activity — increased 6.5 percent with 1,095 open escrows.
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.