A lack of inventory, ongoing consumer concerns about the economy and seasonal forces combined to yield a slowdown in sales of existing single-family homes and condominiums during January throughout the San Fernando Valley, the Southland Regional Association of Realtors reported on Wednesday, Feb. 22.
A total of 388 single-family homes and 145 condominiums changed owners in the San Fernando Valley during January, a decline of 22.2 percent and 24.9 percent, respectively, from 12 months ago.
“January numbers reflect sales activity during November and December, before the economy posted improvements and before recent job gains,” said Wendy Silver-Hale, president of the Association. “The recent settlement between state attorneys general and five major banks offer the hope that the market will improve throughout this year.”
Indeed, Silver-Hale and Jim Link, the Association’s chief executive officer, agreed that today’s small inventory is stopping what otherwise would be an exceptional buyer’s market, given today’s low interest rates and the best prices in decades.
There were 2,132 active listings at the end of January, down 30.9 percent from the 3,086 listings reported in January 2011. It was the lowest monthly inventory since April 2005, as the booming sellers’ market was nearing its apex.
At the current pace of sales, the inventory represents a 4.0-month supply, down 30.9 percent from a year ago and down dramatically from the 16.2-month supply of January 2008. A 5- to 6-month supply typically brings a balanced market.
“Part of the reason for the January sales downturn is the tight inventory,” Link said. “Unlike other parts of the nation where there are too many homes for sale, the local inventory more closely resembles the boom days when everything was selling, regardless of price.”
Silver-Hale and Link expect that the settlement with banks will bring more bank-owned properties to the market, while also speeding short sales, where owners sell a property for less than the outstanding loan, offering assistance to some underwater owners, and result in more reasonable loan rules for well-qualified buyers who need a mortgage.
“The economy has shown signs of improvement and there’s reason to be guardedly optimistic,” Silver-Hale said. “We’re hoping the Spring will see further improvements.”
The 388 homes sold last month had a median price of $350,000, unchanged from a year ago and 3.2 percent higher than the December median of $339,000, which was the lowest for this cycle.
The condominium median of $225,000 was up 21.6 percent from the record low for this cycle, which came in May 2009, and 12.5 percent higher than a year ago January.
Some parts of the Valley and some price categories are seeing stiff competition among buyers, Silver-Hale noted.
For example, in some communities it’s not unusual for multiple buyers who are willing and able to pay cash for a home to bid up the final sale price well above the list price.
“Not only are some properties going very quickly and selling above list,” she said, “but, in some instances, all contingencies are being waived. The limited inventory just ads even more pressure on properly priced properties.”
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.