Home sales throughout the San Fernando Valley during January increased slightly compared to a year ago due to record-high affordability in the form of very favorable resale prices and low interest rate on home loans, the Southland Regional Association of Realtors reported on Monday, Feb. 21.
Sales typically come in slowly through the early months of the year due to seasonal factors, but the 499 homes that closed escrow last month were up 1.0 percent from a year ago. That tally also was up 54.5 percent from the record low for this cycle.
The 194 condominiums sold last month were down 5.4 percent from a year ago, but up 83.8 percent from the record low, which came in January 2008.
“Overall, from my personal experience and the reports I’m getting from Realtors, the market seems to be gradually getting better. I hope it’s a trend,” said Fred Sabine, president of the Southland Regional Association of Realtors. “Record-high affordability is the good news, making it easier than ever before for a family to buy their first home.”
Indeed, the California Association of Realtors recently reported that the percentage of first-time buyers who could afford to purchase an entry-level home in California rose to 69 percent in the fourth quarter of 2010, matching the record high set in the first quarter of 2009.
“Plus, prices are not likely to skyrocket, perhaps ever again,” Sabine said. “Instead, resale prices will move up gradually over time.”
The median price of the 499 homes sold last month in the San Fernando Valley was $350,000, down 7.9 percent from a year ago. That was nonetheless up 3.0 percent from the record low, which came in February 2009.
Likewise, the condominium median price of $200,000 was off 7.0 percent from January 2010, but up 5.3 percent from the record low, which was set in January 2009.
“Consumer uncertainty about the economy is the primary brake on sales,” said Jim Link, the Association’s chief executive officer. “Families buy homes when they feel secure about their jobs and the economy and that is improving gradually.”
While the number of bank-owned properties on the market appears to be declining, Link said he expects short sales to dominate resale activity for months to come.
“Short sales are definitely up, which will depress sales statistics because they take longer to close than traditional sales,” Link said. “Short sales also impact the median price, offering buyers an unprecedented opportunity to buy at the lowest possible price.”
While a December to January drop in resale activity is typical, Link and Sabine said they expect to see sales pick up as Spring approaches, even though pending sales suggest activity will soften further before it improves. However, today’s highly favorable opportunities eventually will trump consumer uncertainty, prodding many to get of the fence and jump into the market.
Those who do will find a slightly larger selection of homes to chose from. There were a total of 3,086 active listings throughout the San Fernando Valley at the end of January, up 11.2 percent from a year ago.
At the current pace of sales the inventory represents a 4.5-month supply, only slightly below than the desired 5- to 6-month inventory that represents a balanced market.
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.