Home sales in the San Fernando Valley for 2011 yielded mixed results as lingering effects of the nationwide recession impeded recovery and a tight inventory of homes for sale limited buyer options, the Southland Regional Association of Realtors reported on Tuesday, Jan. 24.
Record-low interest rates on home loans and favorable prices brought more buyers out as 2011 progressed and multiple local, state and national indicators suggested better days ahead.
Valley Realtors generated more than $3.4 billion for the homeowners, buyers and the local economy last year, not including the millions more in related services that typically accompany sales, such as appliances, construction and landscaping.
“We’re seeing signs of an improving economy, with manufacturing up, unemployment declining, and new home construction gradually getting into gear,” said Wendy Silver-Hale, the 2012 president of the 9,000-member Southland Regional Association of Realtors.
“I do not expect to see an explosion of sales and prices,” Silver-Hale said. “Instead, I foresee a more stable approach for 2012, with a gradual increase in sales, a firming up of prices, followed by a slow rise, and ongoing work to quickly move short sales and bank-owned properties through the market.”
Silver-Hale and Jim Link, the Association’s chief executive officer, agreed that there would have been more sales in 2011 if more properties were listed for sale.
“The market cannot fully recover until standard sellers feel comfortable enough to jump back into the market and list their home for sale,” Link said. “And that will happen as short sales and foreclosed properties further diminish and some help is extended to owners who owe more than the current resale value of their home.”
With hard work, cooperation from lenders and some luck, especially regarding the international economy, Link said he believes 2012 will post improvements in the local residential housing resale market and modest price gains.
The 6,335 single-family homes that changed owners during 2011 was the second lowest total on record, behind only the 6,271 closed escrows of 2007. Yet the 7.0 percent decline for 2011 was an improvement from the 12.5 percent of 2010 and dramatically better than the 34.9 percent drop of 2007 as the national economic recession was gathering momentum.
Condominium sales of 2,351 units were down 4.9 percent from the 2010 total. That compares to the 0.9 percent drop reported in 2010 and the 33.2 percent plunge of 2007.
The annual median price of single-family homes sold in 2011 was $363,117, down 6.9 percent from 2010. It was the lowest annual median price since 2003 and was 40.6 percent below the record high median of $611,933 posted in 2007.
The condominium annual median price of $217,367 was down 3.1 percent from 2010, the lowest annual median since 2002. The 2011 annual condo price was down 45 percent from its peak in 2006 of $394,917.
“Prices are so favorable, rates are so low and pent-up demand is so high that Realtors are convinced more homes would be selling, if only we had more homes to sell,” Silver-Hale said. “Yet inventory is incredibly tight.”
The December inventory of 2,462 active listings was down 27.8 percent from the prior year and represented a mere 3.1-month supply at the current pace of sales, well below the desired 5- to 6-month supply. The average monthly inventory for 2011 of 3,034 active listings was the second lowest over the last 25 years.
Despite national reports of excessive inventory in some regions of the nation, the relatively small local inventory has been an issue throughout the recession. Inventory peaked at 7,730 listings in October 2007 and has been declining virtually every month since. Yet even that total pales compared to the record 14,976 active listings set in July 1992, when the second of four housing bubbles since the late 1970s popped.
Regarding December activity, a total of 581 single-family homes and 214 condominiums changed owners in the San Fernando Valley. The total for homes was down 0.9 percent from a year ago while condo sales increased 1.4 percent.
Interestingly, while pending sales continue to fall, down a modest 5.1 percent in December, the month-to-month closed escrow totals rose for both homes and condos, increasing 13.7 percent and 12.6 percent, respectively.
The median price of homes sold last month fell 17.7 percent to $339,000, setting a record low for this cycle. The December condominium median price of $219,000 was off 1.4 percent from a year ago, but up 18.4 percent from the record low which came in May 2009.
The Southland Regional Association of Realtors® is a local trade association with more than 9,000 members serving the San Fernando and Santa Clarita Valleys. SRAR is one of the largest local associations in the nation.