Even with ongoing favorable conditions, limited home sales during September throughout the San Fernando Valley threaten to make the traditionally down winter months more sluggish than usual, the Southland Regional Association of Realtors reported on Thursday, Oct. 21.
A total of 581 homes and 194 condos changed owners last month, off 15.1 percent and 23.3 percent, respectively, from a year ago. However, home sales were up 7.8 percent from August, marking the first rise in the month-to-month figure after three consecutive months of declines. For perspective, even with the current slow down, the September figure was still up 79.9 percent from the record low for this cycle, which came in January 2008.
"The market is much more stable than two years ago, yet there's no question that buyers are hesitant, unsure about their jobs, the economy and what will happen as a result of the coming mid-term election," said Patti Petralia, president of the Southland Regional Association of Realtors. "Yet home prices continue to inch higher because the people who are active understand that today's advantageous conditions will not last long — favorable pricing, incredibly low interest rates, a slightly rising inventory, and sellers who are willing to negotiate."
The median price of the 581 homes sold last month came in at $395,000, up 3.9 percent over a year ago, a pattern that has been virtually unbroken since last November. Resale prices are down 39.7 percent from their record high, yet have rising 16.2 percent from the February 2009 low of $339,900.
Similarly, the condo median of $220,000 was off 12.0 percent from a year ago. That was down 47.0 percent from the record high of February 2006, yet has climbed 15.8 percent higher than the low point of $190,000 in January 2009.
"Even though it's a great time to buy, the last two months have been disappointing," said Jim Link, the Association's chief executive officer. "The federal homebuyer tax credits pulled some sales earlier in the year. Yet the drop in activity since credits expired is nothing compared to the free fall of 2007 and 2008."
What was a rising market earlier this year is likely to remain sluggish through winter or until a sense of urgency prompts buyers, who are still coming out in great numbers, to get busy, Link said.
There were 3,793 active listings throughout the Valley at the end of September, down 29.8 percent from a year ago. That's a 4.9-month supply at the current pace of sales with a 5- to 6-month supply indicating a balanced market. The highest the inventory climbed during this downturn was 7,730 listings for a 16.0-month supply. The record-high inventory came in July 1992 with 14,976 listings, a 17.6-month supply at the then current pace of sales.
Pending escrows, a measure of future activity, suggests that the market may slow further in the coming months. There were 1,045 open escrows at the end of September, down 39.1 percent from a year ago.
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.