Fueled by stiff competition from traditional buyers and investors, home and condominium sales were up during January, while the median price of single-family homes hit its highest mark in more than four years, the Southland Regional Association of Realtors reported Thursday, Feb. 20.
The $420,000 median price of homes that closed escrow last month throughout the San Fernando Valley was the first time since December 2010 that the median rose above the $400,000 benchmark. It was up 20 percent compared to a year ago January, the highest monthly median since August 2008.
The condominium median price of $280,000 was up 24.4 percent over a year ago. It was the highest since July 2008.
“Buyers are out there, investors know real estate remains undervalued, and today’s critically low inventory all add up to a scramble over every properly priced listing that yields a final sale price at or well above the list price,” said Sharon Barron, the 2013 president of the Southland Regional Association of Realtors. “Activity has picked up in all price ranges, while buyers with the ability to pay all cash have a distinct advantage.”
The limited inventory narrows the options for the swelling ranks of prospective buyers, which typically translates into multiple offers. One Realtor reported listing a property at 8 p.m. Monday only to have 12 offers on it by 2:30 p.m. Tuesday, with six more prospective buyers clamoring to view the property. None of the buyers who made offers had even seen the property; all 12 were all-cash offers; and, all of the offers were at list price, with the exception of one offer, which was significantly higher than list.
“The market is definitely picking up, and that’s good news for everybody,” said Jim Link, the Association’s chief executive officer. “As prices go up, the percentage of owners who are underwater goes down, which frees them to list their home for sale.
“While cash is king and investors have an advantage, more and more properties are selling in the traditional way,” Link said. “As the number of short sales and foreclosure-related sales drop, traditional sales will increase and the market will improve even more.”
Indeed, Association statistics for January showed that a record-high 65 percent of all properties that changed owners during January were traditional, standard purchases. Short sales, where the lender allows owners to sell for less than what is owed, accounted for 23.8 percent of all closed escrows, and REOs — Real Estate Owned property acquired by lenders via foreclosure — fell to 10.2 percent of total transactions.
A mere 1,025 properties were listed for sale throughout the San Fernando Valley at the end of January, a vast market that would be better served if there were between 3,000 and 3,500 listings. At the current pace of sales, the 1,025 active inventory represents a mere 1.8-month supply, when a 5- to 6-month supply would indicate a balanced market. After four consecutive months of record-setting lows, the inventory increased slightly in January, yet was nonetheless 51.9 percent below year ago levels.
A total of 393 single-family homes closed escrow during January, up 1.3 percent from a year ago. The 162 condominium transfers were 11.7 percent higher than January 2012.
Both sales categories were down from December tallies — 33.9 percent and 34.1 percent, respectively — which followed seasonal patterns, yet were more pronounced as this December’s home sales rose to the highest level in three years and condo sales posted the best December tally since December 2008.
“The heavy investor activity, including from overseas, proves that they believe the bottom of the market is long gone,” Link said. “The market still has a lot of healing to do, yet investors clearly believe real estate is a solid investment, and that is a positive attitude that is quickly spreading.”
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.