A tight inventory and the end of federal tax credits contributed to a slowdown in home resale activity during July throughout the Santa Clarita Valley, the Southland Regional Association of Realtors reported on Thursday, Aug. 19.
Realtors closed escrow on 176 home sales last month compared to the 235 sales of 2009, a drop of 25.1 percent. The 68 condos that changed owners last month came in 22.7 percent below year ago totals.
"There are plenty of buyers out there who want to take advantage of the low prices and record-low interest rates," said Andrew Alter, president of the Association's Santa Clarita Valley Division. "The small inventory is a huge challenge, combined with the outsized expectations of lenders and continual delays getting final approval, especially on short sales.
"Investors and first-time buyers still make up the majority of transactions," Walter said. "Yet short sales take too long to negotiate, banks are making buyers jump through multiple hoops, and escrows, as a result, take too long to close."
Throw in the impact of losing federal tax credits and Walter said it's easy to see why the market is slowing down.
While off 56.5 percent from the record high 405 sales of June 2005, even with the slowdown in activity compared to a year ago, local sales during July are still up 77.8 percent from the low point of 99 sales set in January 2008, the Association reported.
"Keeping perspective is a challenge," said Jim Link, the Association's chief executive officer. "We knew the end of the tax credits would hobble sales. Nonetheless, we've come a long way since January 2008 and we hope that the current dip in consumer confidence is only momentary because it is a key ingredient in a full-fledge recovery."
For the second time this year, the median price of single-family homes sold last month came in at $420,000, up 2.5 percent from a year ago and 5.1 percent ahead of the June median. The July median is far below the record-high $643,000 of April 2006, but last month's figure was up 9.2 percent from the record low of $385,000 set in December 2008.
The condominium median was up less than 1 percent during July to $220,000. It, too, has been trending higher for months and was 7.3 percent above the record low of $205,000 reported in January 2009.
"Some of the slowdown can be blamed on the loss of the tax credits," Link said, "but there would be more sales if the inventory was larger and if lenders streamlined the approval process."
The 812 single-family listings and 315 condo listings pushed the active inventory slight higher last month. While still too low to satisfy demand — which generate multiple offers on many properties — the 1,127 listings were up 39.7 percent from a year ago.
At the current pace of sales the inventory represents a 4.6-month supply compared to the 2.5-month inventory of July 2009. A 5- to 6-month supply presents a balanced market.
Pending escrows — a measure of future activity — suggest that the July pace will be around for months to come. The 360 open escrows at the end of the month were off 15.3 percent from a year ago July, a month that typically is one of the busiest months of the year.
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.