Sales of existing homes and condominiums in the Santa Clarita Valley increased during May even as a severely limited inventory contributed to a 17 percent rise in resale prices, the Southland Regional Association of Realtors reported on Tuesday, June 25..
A total of 196 single-family homes changed owners, up 5.4 percent from a year ago. Sales have been trending higher for months with the monthly tally fluctuating up and down, rising as high as 247 sales in December, yet off slightly from the 209 closed escrows of this April. The May total was up 98.0 percent from the low point of 99 sales set in January 2008.
Likewise, Realtors closed escrow on 103 condominiums last month, up 24.1 percent from a year ago, yet off 4.6 percent from April’s 108 sales, which was the second highest monthly total since March 2007. May Condo sales were up 232.2 percent from the record low of 31 closed escrows, which also came in January 2008.
“The long-term outlook is excellent, although it will take a couple years for the inventory to come back to what we’re used to,” said Bob Khalsa, president of the Santa Clarita Valley Division of SRAR. “In the short term, the market is getting healthier. We just have to ride out the very low supply of homes listed for sales.”
A mere 381 active listings were reported on the MLS operated by SRAR, down 33.2 percent from a year ago. That figure represents a 1.3-month supply at the current pace of sales; a 6-month supply is needed for a balanced market. While inadequate to satisfy heavy demand, the inventory has increased slightly on a month-to-month basis, while the rate of decline has moderated.
“No doubt, the lack of listings is pushing resale prices higher,” said Jim Link, SRAR’s chief executive officer. “Yet the rapid rise in prices is the result of a long, depressed market and pent-up demand, plus historically low interest rates on home loans, Yet as rates go up and more homes come on the market, it’s likely sales will hit a sustainable pace that will take pressure off prices.”
The median price of homes that closed escrow last month in the Santa Clarita Valley came in at $420,500, up 17.8 percent from a year ago and 1.3 percent ahead of this April. The monthly median has been above $415,000 for three consecutive months and has increased 23.7 percent from the record low of $340,000, which came in November 2011. It was still 34.6 percent below the record high $643,000 set in April 2006.
The condominium median price of $235,000 was up 17.5 percent from a year ago, yet fell 2.5 percent from the April median. The condo median was down 40.8 percent from the record high, yet up 38.2 percent from the record low.
Both Link and Khalsa expect the coming months to see fewer distressed sales on the market and an increased share of activity going to traditional standard sales, homes that have positive equity. Standard sales accounted for 63.5 percent of all closed escrows during May, while Real Estate Owned sales — property typically acquired by lenders via foreclosure — held a 7.7 percent share, and short payoffs, where the lender agrees to a sale price that is lower than the outstanding loan balance, fell to 28.1 percent. Not long ago, distressed sales accounted for nearly 60 percent of resale activity.
“It’s a competitive market for buyers, yet if they work with their Realtor there are plenty of people buying the homes they want and need,” Khalsa said. “Sellers who want to downsize or upsize should get busy, too. They’re likely to get more than expected on the sale of their home and they’ll have a chance to capture low rates and good prices, which means lower property taxes.”
By capturing today’s lower resale prices, Khalsa said the potential long-term savings in property taxes alone should prod sellers to jump into the market.
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.
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