Sales of existing single-family homes in the Santa Clarita Valley lagged during January as buyers and sellers dealt with an exceptionally limited inventory along with new market realities, including tighter lending rules, and the demise of bargain-priced distressed sales, the Southland Regional Association of Realtors reported Wednesday, Feb. 26.
A total of 138 homes changed owners during the first month of the year, down 7.4 percent from a year ago and off 43.4 percent from December. Realtors helped close escrow on 65 condominium sales during January. That figure was up 10.2 percent compared to January 2013, but down 37.5 percent from December, a decline which follows seasonal patterns.
“We’re definitely in a transition phase where buyers and sellers are coming to grips with today’s housing resale market,” said Nancy Starczyck, president of the Santa Clarita Valley Division of SRAR. “I expect people to have an improved perspective with enough confidence to jump into the market as busy Spring and summer homebuying seasons get underway.
“Today’s market is dramatically different from even mid-2013,” Starczyk said. “There are only seven homes currently listed that are priced under $350,000. Buyers will find more condos and townhomes for sale, yet the total inventory is pretty bare bones.”
This lack of inventory is partly due to the passing of distressed properties, both Real Estate Owned-foreclosure related homes and short sales, where lenders accept a sale price lower than the outstanding loan balance.
A mere nine foreclosure-related sales, or 4.4 percent of total home and condominium activity, closed escrow during January, while there were 24 short sales, or 11.8 percent of total combined residential sales or the month. That compares 34 foreclosures and 74 short sales reported in January 2013.
“Lower sales results from a combination of seasonal forces, dropping affordability, and tightened underwriting for home loans, but today’s miniscule inventory could well be the biggest factor,” said Jim Link, the Association’s chief executive officer. “It’s a good, healthy thing to see standard sales rise as investors and distressed sales depart, although traditional sellers have yet to fill the void.
“That will begin to correct itself in the months ahead,” Link said, “especially as home sellers gain greater confidence in the economy.”
There were 496 active listings throughout the Santa Clarita Valley on the Association’s Multiple Listing Service at the end of January. That was up 52.6 percent, a deceptive increase because it was coming up off record low listing totals. At the current pace of sales, the inventory represents a 2.4-month supply. To hit the desired 6-month supply, the region would need 1,220 active listings.
Starczyk and Link noted that overall the market is on much stronger footing, especially in regard to condominium sales, which were hit hard because so many local homeowner associations had let lapse or never pursued FHA approval certification, which helps buyers obtain low interest rate and low downpayment loans.
“Rising resale prices are helping HOA’s,” Straczyk said, “but many more buyers from all income categories could get a FHA-approved loans if HOA boards of directors applied for certification. Failing to have FHA approval hurts HOAs by increasing the likelihood that either units will not sell or they will sell to investors only to be turned over to renters, who typically do not have the long-term interest of a complex at heart.”
Rising resale prices have pushed thousands of owners into a positive equity position after being underwater for years, but Starczyk and Link believe that while prices will continue to rise, the increases will be at a more moderate pace.
The 138 homes sold during January had a median price of $439,900, which was up 20.3 percent from a year ago, but off 1.6 percent from December. The median peaked at $450,000 in August, but has been hovering below that mark ever since. The condominium median price came in at $250,000, up 20.9 percent compared to January 2012, and 2.0 percent ahead of the December median price.
“We saw a big run up in prices last year when there were distressed sales, bargains and more listings,” Link said. “We’re optimistic about what the Spring holds, yet it’s important for buyers to understand that lenders are keeping a tighter lid on loans, which impacts prices. The funny money is gone. Now lenders are being more diligent; they want to make sure every buyer actually can afford the home they want to buy.”
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.