More than any other factor—whether tight inventory, slightly higher interest rates, rising resale prices—seasonal forces contributed to fewer sales of homes throughout the Santa Clarita Valley during September, the Southland Regional Association of Realtors reported on Monday, Oct. 28.
A total of 173 single-family homes changed owners, off 8.9 percent from a year ago and down 1.7 percent from this August. Propelled by ongoing demand for affordable housing, condominium sales of 100 units were up 9.9 percent from September 2012, yet off 22.5 percent from this August, which also reflects historical patterns that have sales dropping as summer draws to a close.
“”Sales always drop this time of year,” said Bob Khalsa, president of the Santa Clarita Valley Division of SRAR. “Yet a lot of little changes are adding up to ongoing improvement in the local home resale market.”
Those changes included the return of traditional homebuyers as investors pull back from the market due to rising resale prices, improved access to affordable home loans, slight increases in the inventory, the gradual return of new home construction, which influences and benefits the resale market, and the impact of multiple offers on properly priced and beautifully prepared properties.
“My advise to sellers is if the home is priced right and looks great you will get multiple offers,” Khalsa said. “But if priced too high or limited by negative features, you will not get multiple offers and you will need to make the appropriate adjustments.”
What’s happening now, Khalsa noted, is the “creation of a healthy marketplace, the emergence of a new normal” with competition tempering excesses and reigning in all-to-rapid price increases.
Jim Link, the Association’s chief executive officer, agreed that the market is moving toward a new normal, but added that federal policy is the wildcard that could impact not only home prices, but also a buyer’s ability to obtain a home loan at a reasonable rate of interest.
“An important part of what dictates where the housing market goes is what the federal government does with housing policy,” Link said. “There’s a feeling that what’s in question is the overall philosophy about the value of homeownership. That’s a cloud hanging over the housing market here and nationwide. No doubt, continued gridlock in Washington will impact housing.”
Longstanding federal policy has made home loans accessible and affordable to most families, Link said. If that changes, a prospective buyer’s ability to pay could be limited, which, in turn, would have an impact on prices.
Forecasts for 2014 call for prices to moderate from this year’s double-digit increase. The median price of the 173 homes sold last month came in at $430,000, up 16.2 percent over a year ago, but off 4.4 percent from the August median, which was the highest since August 2008. The September median was up 26.5 percent from the record low yet was 33.1 percent below the record high.
Similarly, the 100 condominiums that changed owners last month had a median price of $275,000, up 34.9 percent over September 2012, while down 6.8 percent from this August. The condo median was 61.8 percent above the record low, yet 30.7 percent below the record high.
Unlike just a few months ago, standard sales—between traditional owners and buyers with greatly diminished distressed sale activity—dominated the market during September. Of the 273 combined closed escrows last month, 82.1 percent were standard sales. That was the highest percentage since the Association started keeping the statistic and dramatically improved from the 27.8 percent share of standard sales reported in July 2012.
Real Estate Owned transactions— REOs are properties held by lenders that were typically acquired through foreclosure—fell to a mere 5.5 percent of closed escrows; short sales, where lenders agreed to accept a sale price for less than the balance of the outstanding loan, came in at 11.4 percent, which was the lowest percentage on record.
The inventory of properties listed for sales throughout the Santa Clarita Valley is slowly rising, yet remains limited. There were 564 active listings at the end of September, up 36.9 percent from a year ago.
That increase marked the third consecutive monthly rise and the largest jump since January 2011. At the current pace of sales the inventory represents a 2.1-month supply, well below the desired 6-month inventory, yet nonetheless the highest figures in more than a year.
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.