September’s month-to-month drop in home and condominium sales throughout the San Fernando Valley resulted from seasonal forces more than the tight inventory and rising rates or higher resale prices, the Southland Regional Association of Realtors reported on Monday, Oct. 28.
A total of 504 homes closed escrows last month, off one sale or less than 1 percent, compared to a year ago September. The 10.2 percent drop in sales from August reflects a traditional seasonal pattern that sees month-to-month homebuying activity taper off once summer ends, schools are back in session, and holidays approach.
Similarly, the 200 condominiums that changed owners last month fell one sale or less than one percent from September 2012. September condo sales dropped 19.0 percent from August totals, which also followed established seasonal patterns.
“Despite reports to the contrary, plenty of properties continue to receive multiple offers,” said Sharon Barron, president of the 9,000-member trade Association, one of the largest in the nation. “Buyers realize inventory is up slightly and sales typically slow this time of year, so they’re being more selective and sellers are having to accept some contingencies or make improvements.
“What we’re seeing is the gradual emergence of a new normal,” Barron said. “Foreclosure sales have fallen to pre-recession levels, while short sales are dropping every month. That limits opportunities for investors and all-cash buyers, while opening the way for traditional home sellers and buyers. It’s not here yet, but we’re inching closer to a market where sales remain solid, even as prices continue to rise, but at a much slower pace.”
Jim Link, the Association’s chief executive officer, agreed, 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 price increases to moderate from this year’s double-digit increases. The median price of single-family homes sold during September in the San Fernando Valley came in at $520,000, up 33.3 percent from a year ago. The condominium median of $325,000 was up 38.3 percent. While 53.4 percent and 75.7 percent higher from their respective record lows, both median prices are still about 20 percent below the peak of the last decade’s housing boom.
Foreclosures and short sales continue to slide off the radar. Of total combined sales last month, foreclosures captured a mere 4.8 percent and short sales 9.5 percent. Standard sales—involving traditional buyers and sellers, instead of lenders and investors—accounted for 85.4 percent of closed escrows, up dramatically from just a year ago October when traditional buyers accounted for 52.9 percent of resale activity.
While still exceptionally limited, the inventory of properties listed for sale Valleywide continued to post minor increases. A total of 1,672 properties were active on the Multiple Listing Service operated by the Association. That was up 12.7 percent over a year ago and the highest level since May of last year. September marked the sixth consecutive monthly increase in the inventory.
At the current pace of sales, the inventory represents a 2.4-month supply, up from a 2.1-month supply reported 12 months ago and the highest since April 2012. However, that figure was still well below the desired 6-month supply that historically represents a balanced 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.