At a time of year when sales typically take off and even with the best sale prices in years, home sales slowed during May throughout the Santa Clarita Valley due to a limited inventory and the end of a federal tax credit program that had prompted many buyers to act, the Southland Regional Association of Realtors reported on Wednesday, June 22.
Realtors closed escrow on 196 single-family home sales during May, down 10.9 percent from a year ago when 220 homes changed owners. The May total also was 8.4 percent lower than the 214 sales of this April.
A total of 68 condominiums were sold last month, down 9.3 percent from 2009, but up 15.3 percent from this April.
"There are definitely fewer buyers now that the $8,000 federal tax credit has expired," said Andrew Walter, president of the Association's Santa Clarita Valley Division. "More importantly, some buyers have decided to wait until the choice of homes available improves.
"I hear from so many agents that buyers have become discouraged writing offer after offer with no success," Walter said. "Without an incentive and with no clear upward direction in the economy, some buyers do not see any urgency in buying immediately."
There were 977 active listings on the market throughout the Santa Clarita Valley at the end of May, off 3.3 percent from a year ago. At the current pace of sales, the inventory represents a 3.2-month supply, an indicator that tips negotiations in favor of sellers, albeit they are starting from a price dramatically lower than just a few years ago.
For comparison, a year ago May the inventory was a 3.8-month supply and in May 2008 a 6.6-month supply, which was on the upper end of the 5- to 6-month supply that represents a balanced market.
Walter and Jim Link, the Association's chief executive officer, were hopeful that California's tax credit program — which offers first-time buyers and new home buyers up to a $10,000 tax incentive — would offset the loss of the federal credit, although the benefit of that program could be short lived.
"We expect the state credit to be used up very quickly," Link said, "just as buyers depleted the prior program months before it was set to expire."
The state estimates that more than 15,200 applications had been received as of June 15 for the first-time buyer credit program with another 5,600 applications on hand for the new home credit. If approved, those applications would account for about $78 million of the first-time buyer credit and $36 million of the new home credit. Each program is capped at $100 million. No new applications will be accepted once the state believes it has enough current applications to allocate the full $100 million in each program.
Link said that the limited inventory of homes is most severe in the median and lower price ranges where a tax credit would be of the greatest benefit to buyers.
The median price of single-family homes sold last month was $410,000, up 2.5 percent from a year ago, but off 2.4 percent from the $420,000 median of this April, which was the highest monthly median since the market started its slide.
The condominium median price of $240,000 was unchanged from a year ago. The May condo median was up, however, by 8.6 percent from this April's median of $221,000. The condo median, like the single-family median, has remained volatile, bouncing up and down from month to month, but generally trending higher.
Pending escrows suggest that the market is slowing further. There were 389 open escrows at the end of May, down 19.0 percent from a year ago.
"Traditional sellers are not listing their home unless they have no other choice and lenders are not releasing foreclosed properties in any large numbers," Link said. "There are plenty of people out there who want to buy a home, but all they can do is compete over each new listing and wait to see if the supply starts to increase."
The Southland Regional Association of Realtors is a local trade association comprised of more than 10,000 members serving the San Fernando and Santa Clarita valleys. SRAR is one of the largest local associations in the nation.