An extremely tight inventory along with a flood of multiple offers on many properties pushed San Fernando Valley home and condominium resale prices higher during 2013, up 24.1 percent and 30.9 percent, respectively, the Southland Regional Association of Realtors reported Thursday, Jan. 16.
Distressed sales, which dominated the market the last four years, have dwindled to near pre-recession levels, clearing the way for the return of a traditional market.
“The number of homeowners with negative equity drops lower every month,” said Roger Hance, the 2014 president of the Southland Regional Association of Realtors. “That means the vast majority of owners have equity in their homes, opening the possibility of trading up or down or simply catching up on home improvement projects.
“We have returned to a more traditional market,” Hance said, “and that’s great news for buyers and sellers alike.”
2013 ended with Real Estate Owned listings — properties generally acquired by lenders via foreclosure — representing 4.9 percent of total sales during December. That was well below the record high of 13.5 percent foreclosure sales reported in December 2012.
Similarly, of the total home and condo transactions, short sales — where a lender agrees to a sale for less than the outstanding loan balance — represented 15.4 percent of December closed escrows. That was down from 24.6 percent reported 12 months ago.
As investors pulled back, traditional sales surged throughout 2013. Fully 78.6 percent of all transactions reported during December involved traditional homebuyers. A year ago standard sales accounted for 58.5 percent of all transactions.
“2014 will see further improvement in the area’s housing market,” said Jim Link, the Association’s chief executive officer. “We’re already on much more stable ground economically, while there is far more clarity regarding home loans, what with new lending rules virtually guaranteeing a wild run-up in resale prices will not happen again, even as inventory remains tight.”
Link and Hance believe sales for 2014 will match 2013 totals while resale prices will rise at a slower pace, with the big question being how many current homeowners will decide to list their property for sale this Spring.
“With lending rules now focused on a buyer’s ability to repay plus already higher resale prices, the pool of prospective buyers is limited,” Link said. “Still, this is Southern California where the market will always be robust as too many buyers chase too few available listings.
“If current owners decide the time is right to jump in the market, sales could heat up beyond current expectations,” Hance said.
Members of the Southland Regional Association of Realtors helped buyers close escrow during 2013 on 8,529 single-family homes and condominiums throughout the Valley. That total was down seven sales or less than 1 percent from the 8,536 sales of 2012.
The economic benefit to the region of those sales hit $4.5 billion, not including the millions more that home sales generate for the local community in jobs and related services, such as remodeling, landscaping and appliance and home furnishing purchases.
Single-family home sales accounted for the largest portion of local residential resale activity last year. The total 6,064 home sales was down 4.2 percent compared to 2012. After falling four consecutive years from 2004 to 2007 — which culminated with a 34.9 percent plunge in 2007 — sales posted 13.1 percent and 9.9 percent increases in 2008 and 2009.
“Higher sales in 2008 and 2009 were bolstered largely by federal aid intended to mitigate the impact of the recession,” Hance said. “Once government support expired, home sales declined in 2010 and 2011. We’re now inching closer to the new normal.”
As distressed sales diminished and prices rose, buyers during 2013 flocked to the generally more affordable condominium market, where a total of 2,465 properties changed owners. That was up 11.9 percent compared to 2012. It was the first year of increased condominium sales after two consecutive years of declines and only the second year since 2003 to post higher closed escrows.
2013 also marked the second consecutive year the single-family annual median price increased and the highest median since 2007, when the home median soared to a record high $611,933. The 2013 single-family median price of $476,208 was up 24.1 percent over 2012.
Similarly, the annual median price of the 2,465 condominiums sold during 2013 was $304,833. That was 30.9 percent above 2012, the second consecutive annual increase, the first time it broke through the $300,000 benchmark since 2007, and the highest condominium annual median price since 2007. The record-high annual condo price of $394,917 was set in 2006.
2013 ended with a record-low monthly average inventory of 1,298 active listings. At the current pace of sales, that represented a mere 1.8-month supply, whereas the 27-year average shows a 6.3-month supply is needed to achieve some balance in the market.
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.