Single-family home sales jumped dramatically during October throughout the San Fernando Valley with multiple offers on most homes pushing resale prices higher, the Southland Regional Association of Realtors reported on Tuesday, Nov. 27.
A total of 635 homes closed escrow, up 21.4 percent over a year ago and 25.7 percent better than this September. It was the highest monthly sales total since June 2010 and the first time in 14 months that the sales total broke through the 600-sale benchmark.
“Home sales are up nearly 100 percent from the record low set in January 2008,” said Wendy Silver-Hale, president of the Association. “What’s particularly noteworthy is that much of this activity is fueled by traditional homebuyers as the percentage of distressed sales continues to diminish.
“The return of regular homebuyers is the signal that the market continues its march to normalcy,” she said. “There are still plenty of issues that need to be resolved, but buyers finally understand that today’s prices and low interest rates represent a once-in-a-generation opportunity.”
Local Realtors also closed escrow on 204 condominiums, a total that was down 6.0 percent from a year ago, but would have been higher if only there were more properties for sale.
Active listings throughout the San Fernando Valley continued their disappearing act, with the 1,285 active listings at the end of October down 56.3 percent. October marked the third consecutive month that active listings set a record low.
At the current pace of sales listings represent a 1.5-month supply, which is indicative of an extremely limited inventory. A 5- to 6-month supply is regarded as balanced, giving neither buyers nor sellers an advantage. For comparison, when the market ground to a halt in 2007, listings soared to 7,730, which was a 16.0-month supply at the then current pace of sales.
“Barring something negative happening, like going over the so-called fiscal cliff, the local housing market will continue to improve through 2013,” said Jim Link, the Association’s chief executive officer. “The foreclosure market has pretty well run its course, with not many REO’s coming on the market.
“We’ll be dealing with short sales and underwater loans for a long while,” he said, “yet the limited inventory and pent-up demand for housing are pushing prices higher, which helps growing numbers of current owners return to a break-even or perhaps a positive position.”
When those issues are sorted out, more listings should become available.
Link and Silver-Hale also noted that while lenders have shortened and simplified the loan approval process, short sales are still taking far longer to close escrow than traditional sales. Furthermore, lenders are maintaining tight appraisal and underwriting standards.
"Most borrowers are finding they need a sizeable down payment, often 20 percent or more, and a strong FICO score to qualify for a loan, especially if they are buying in the higher price ranges,” Link said.“Cash is still king, as buyers with good credit and steady employment, but smaller down payments, are having difficulty finding a loan."
First-time buyers looking in the median or lower price ranges may qualify for a low-down FHA loan, yet they often find themselves bidding against investors with all cash.
With multiple offers popping up on most transactions, the median price of homes and condos sold last month posted strong increases. The median home price of $380,000 was up 8.6 percent from a year ago while the condo median of $235,000 was 4.4 percent above October 2011.
Real estate owned sales — property held by lenders that typically was acquired through foreclosure — accounted for 9.4 percent of all closed escrows last month. Short sales, where the lender allows the sale at a price less than the outstanding loan, increased to 22.9 percent, while standard or traditional sales surged to 52.9 percent, the highest level since the Association recently started tracking this statistic. Some 14.4 percent of sales did not specify the type.
At a time of year when activity typically tapers off, pending sales — a measure of future activity — came in with a positive number, in large measure because of renewed interest by traditional buyers. The 959 open escrows at the end of October were up 4.2 percent from a year ago.
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.