The median price and the number of single-family homes sold in the San Fernando Valley increased during November, while the inventory of properties sank to a record low for the fourth consecutive month, the Southland Regional Association of Realtors reported Wednesday, Dec. 26.
A total of 558 homes changed owners, up 9.2 percent while the median price of $399,000 increased 12.4 percent compared to November 2011.
The median price has been trending higher, but has not broken above the benchmark of $400,000 for two years and hit that market or higher only five times since 2008. Following seasonal trends combined with the impact of the extremely tight inventory, November home sales were down 12.1 percent compared to this October.
“It’s a recovering market that wants to take off, prodded by incredibly low interest rates and great prices, yet cannot gain added momentum simply because there is so little to sell,” said Wendy Silver-Hale, president of the Southland Regional Association of Realtors. “What’s really encouraging is the fact that more than two-thirds of the home transactions are equity sales, while distressed properties are in decline.”
Silver-Hale said she believes equity sales will continue to rise as owners who have been sitting the fence, waiting for the market to improve, realize today’s window of opportunity is closing.
Association statistics indicated that 67.5 percent of November home sales were traditional transactions involving owners who have equity in their property. Real estate owned sales, bank-owned property typically acquired through foreclosure, accounted for 11.3 percent of transactions, and short sales, where lenders allow a sale at a price less than what is owed, came in at 15.8 percent.
“Even with the tight inventory, the market looks optimistic, assuming the government gets its act together and doesn’t do anything to curtail activity, “ said Jim Link, the Association’s chief executive officer. “Absent government tinkering or inaction, 2013 will see an even stronger home resale market.”
Link noted two issues that could hurt the nascent recovery: If Congress limits or eliminates an owner’s ability to deduct on income tax returns the interest on home loans; and, requiring owners who owe more than the final short-sale price to pay tax on the difference. As part of its effort to reduce the national debt, lawmakers are considering changes to loan interest deductibility, while it must act before the New Year to extend debt forgiveness in short sales, which expires Dec. 31.
In a region like the San Fernando Valley that should have 3,800 to 4,500 listings to be in balance, there were a mere 1,150 active listings at the end of November. That was down a whopping 66.0 percent from a year ago to set a record low for the fourth consecutive month. At the current pace of sales, the inventory represents a 1.5-month supply, where a 5- to 6-month supply is desirable.
Realtors also closed escrow on 186 condominium sales during November, a total that was down 2.1 percent from a year ago. Nonetheless, condo sales were up 77.1 percent from the record low for this cycle. The median price of condos that changed owners last month came in at $244,900, up 8.8 percent over November 2011.
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.