Sales of existing single-family homes and condominiums increased significantly during May as bargain hunters scrambled through an extremely limited inventory of homes listed for sale, the Southland Regional Association of Realtors reported on Friday, June 22.
A total 567 homes changed owners in the San Fernando Valley, up 13.2 percent over a year ago and 10.7 percent ahead of this April. It was the highest monthly total so far this year and one of only a handful of instances since 2009 of year-to-year gains. The May tally was up 75.5 percent from the low point for this cycle, which came in January 2008 with 323 closed escrows.
Likewise, a total of 208 condominiums sold last month, up 39.6 percent from a year ago and 26.1 percent better than this April’s figure. It, too, was the highest monthly total so far this year. Condo sales were up 98.1 percent from the cyclical low point, which also came in January 2008 with 105 closed escrows.
“The local housing market clearly is on an upswing,” said Wendy Silver-Hale, president of the Southland Regional Association of Realtors. “Realtors report improved activity at virtually every listing as buyers seem to understand that the window of opportunity — low prices and low interest rates — is already starting to close.
“More homes are selling above list price, more transactions rack up multiple offers, and more properties would have sold, except for an extremely tight inventory,” Silver-Hale said.
The 1,643 active listings at the end of May fell yet again, down 42.3 percent from a year ago for the lowest supply since the record low of March 2004. The inventory has been on a virtually uninterrupted decline since peaking for this cycle at 7,730 active listings in October 2007, just as the boom market was stalling and the national recession was starting to unfold. The current inventory represents a mere 2.1-month supply at the current pace of sales, well below the desired 5- to 6-month supply.
“There simply is no inventory out there,” said Jim Link, the Association’s chief executive officer. “Sellers still have to be realistic about pricing, because even with increased competition for good listings, buyers are being highly selective and, unlike 2004 or 2005, buyers will not overpay for an overpriced property.
“Today’s buyers have a vastly different attitude,” Link said. “Hopefully we won’t see the ridiculous lending practices of the boom market where people accepted loans at purchase prices they clearly could not afford.”
Link and Silver-Hale said they were “guardedly optimistic” that the housing market will continue to improve and that the number of foreclosures, short sales and instances where owners owe more than a home is worth will decline further in coming months.
“I think it’s clear that we’ve bottomed out, and that’s a good thing,” Link said. “Buyers just cannot expect to see outrageous annual appreciation, which got us into this mess to begin with.”
While coastal regions, particularly the San Francisco Bay area, reported significant price gains during May, the median price of single-family homes and condos in the San Fernando Valley fell compared to a year ago.
The single-family median price came in at $375,000, down 6.0 percent from May 2011. The condominium median of $220,000 was off 2.7 percent.
With many sales going out higher than list price, Silver-Hale said she believed the median price drops were the result of concentrated activity in entry-level price ranges, which would tend to push the median price down. Homes and condos priced under $450,000 captured 77 percent of the sales last month.
Trade-up buyers are back, as are high-end purchasers, with the 63 sales last month of over $1 million representing a 46.5 percent increase from a year ago.
Pending escrows — a measure of future sales activity — suggest the Valley’s nascent recovery will continue through the summer. Pending escrows were up 11.2 percent at the end of May.
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.