The median price of homes sold during September in the San Fernando Valley increased 8.3 percent compared to a year ago as buyers competed over an extremely limited inventory, the Southland Regional Association of Realtors reported on Thursday, Sept. 25.
September’s fall in home sales followed seasonal trends, yet the 505 sales, a 6.7 drop, more likely were hindered by the tight supply. A total of 201 condominiums changed owners last month, four sales more, or 2.0 percent higher, than a year ago.
“Properties are gobbled up as soon as they come on the market,” said Wendy Silver-Hale, president of the Association. “There literally is a burst of intense activity as sometimes dozens of offers arrive within hours and days of a listing going public.
“And, in many instances, it’s the all-cash offer that wins,” she said, noting that not all cash offers come from investors.
She also said that appraisers often overlook the ongoing improvement in the market in submitting a too conservative price review, causing problems securing a loan, and the loan qualification process, while greatly improved from just a few months ago, remains slow and frustrating.
Nonetheless, the double-digit drop in active listings appears to be causing the biggest headache. The 1,483 active listings at the end of September were off 52.4 percent from a year ago. They offered only one minor bright note — the total was up from the all-time record low of 1,322 set this August, making the September total the second-lowest on record. March 2004 had the third lowest inventory, just as the housing boom was gaining full momentum.
At the current pace of sales, the inventory represented a 2.1-month supply, up slightly from August’s 1.8-month supply. A balanced market is in the 5- to 6-month range. October 2007 saw the highest inventory through this cycle with 7,730 listings, which represented a 16-month supply at the then current pace of sales.
“It’s definitely an improved market spanning all price ranges even as the lack of inventory causes an acute problem locally, throughout California, and even nationwide,” said Jim Link, the Association’s chief executive officer. “We’re still not out of the woods, but there’s an optimism in residential real estate that the market is recovering.”
Link and Silver-Hale agreed that while lenders have improved the loan qualification process and short sales are moving faster and smoother, lenders still have much to offer before typical, well-qualified borrowers can count on landing a loan.
Unless it’s an all-cash offer, they said prospective buyers need to be aware that the highest bid might capture the seller’s attention, yet could well fail if the house does not appraise at the higher price.
“Lenders are unwilling to write a loan unless there are solid comparables to justify the price,” Link said. “Buyers may bid the price up $50,000 over list, but that doesn’t mean the lender will agree, which then creates a big problem for all parties, a problem that can translate into delays and a lost opportunity.”
The median price of the 505 homes sold last month came in at $390,000, up 8.3 percent over a year ago. The median has been flirting with the $400,000 benchmark for months and is up 15.0 percent from the record low for this cycle of $339,000, which came in December 2011.
The condominium median price of $235,000 was unchanged from a year ago and was up 27.0 percent from its low point of $185,000 set in May 2009.
Link and Silver-Hale agreed that prices seem to be rising in all price categories, especially as sales pick up in the higher price ranges.
Standard sales held the largest share of activity with 39.0 percent of total closed escrows, the Association reported. Real Estate Owned transactions involving properties typically acquired by lenders via foreclosure, came in at 11.7 percent, while short sales, where the home sold for less than the outstanding loan, captured 18.1 percent of total activity. The percentage of REO’s appears to be trending lower, while short sales are on the rise, supporting reports that more lenders are open to a short sale as an option to foreclosure.
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.