Despite a limited inventory and rising resale prices throughout the Santa Clarita Valley, entry-level buyers helped condominium sales maintain momentum during October, the Southland Regional Association of Realtors reported on Tuesday, Nov. 26.
A total of 105 condominiums closed escrow last month, up 26.5 percent from a year ago and 5.0 percent above this September. It was the seventh consecutive month condominium sales came in above the 100 mark. Only twice since October 2005 had the total exceeded 100 until the run began this April.
Condo sales were up a whopping 238.7 percent from the record low of 31 closed escrows set in January 2008. For comparison, sales of 179 single-family homes during October were up 80.8 percent from their record low, but down 17.5 percent from a year ago. Home sales increased 3.5 percent from this September.
“The lesson condo buyers illustrate should encourage all prospective buyers to get moving,” said Bob Khalsa, president of the Association’s Santa Clarita Valley Division. “It may sound like a cliché, yet it’s true — There’s no time to buy like now: interest rates are low, but likely to rise; waiting assures only higher property taxes; prices are steadily moving higher; and, competition will heat up again in the Spring, yet I expect only modest increases in the inventory.”
The desirability of the Valley and the relatively low price of local condominiums appear to be the driving forces for buyers, Khalsa said: “The magic number is $335,000. This number really matters because it’s what entry-level buyers can actually afford. Luckily, there are still condos throughout the Santa Clarita Valley at and below that number.”
Indeed, the condominium median price — where half the sales are below and half above — came in at $280,000. That was up 40.0 percent from a year ago and 1.8 percent ahead of this September. The price has been trending higher yet continues to fluctuate, hitting its peak for the year in July with a median of $300,000, the first time that figure has been seen since February 2008.
The single-family home median of $440,000 was up 22.2 percent over October 2012 and 2.3 percent higher than September. Every month since March has been above $400,000, peaking at $450,000 in August.
“The housing outlook is positive, moving toward a normal market,” said Jim Link, the Association’s chief executive officer. “With fewer investors in the market and distressed properties evaporating, that clears the way for traditional buyers and sellers, neither of whom have a particular advantage at this juncture, even with the tight inventory.”
The active inventory of homes listed for sale on the Multiple Listing Service operated by the Association increased by 48.5 percent in October, yet by historical standards remained exceptionally tight. A total of 554 active listings were reported at the end of the month, which represented a 2.0-month supply at the current pace of sales.
It was the second month above a 2.0 supply after more than a year below that benchmark, which struck bottom with a 0.9-month supply in December. Historically, a 6-month supply signals a balanced market, although Khalsa said he doubts the inventory will hit or exceed a 3-month supply in the coming months.
Khalsa and Link agreed that the gradual reduction of distressed properties is helping the market move toward a new normal, even as the demise of distressed properties contributes to a lower inventory. Traditional transactions between a typical buyer and seller dominated the market last month, accounting for 80.3 percent of October transactions.
Foreclosure-induced sales fell to their lowest level on record, representing a mere 3.9 percent of closed escrows, a figure that many experts say equals the pre-recession level. Short sales — where the lender allows a sale of a home for less than the outstanding loan balance — increased slightly from September, yet still accounted for just 15.8 percent of transactions, the second lowest level on record.
Both Association officers also said what happens to local housing in large measure hinges on what happens in than nation’s capitol. The “wild card” for housing, they said, is what Congress does with federal housing policy, the fate of Fannie Mae and Freddie Mac, and if, how fast, and how high interest rates will rise.
The Southland Regional Association of Realtors® is a local trade association with more than 8,900 members serving the San Fernando and Santa Clarita Valleys. SRAR is one of the largest local associations in the nation.
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