Even as the inventory of homes for sale increased slightly, the pause in the local housing market during February reflected the lack of entry level-priced homes as distressed properties disappeared and rising resale prices limited the pool of available buyers, the Southland Regional Association of Realtors reported on Wednesday, March 19.
The 1,419 active listings throughout the San Fernando Valley represented a 37.4 percent increase over a year ago. Yet the 3.2-month supply that figure represented, while up from the 1.4-month supply of February 2013, was well below the desired 6-month supply at the current pace of sales. To hit that mark, more than 2,650 listings would be needed.
“Realtors believe the typically busy Spring home buying season will be active as owners adjust their price expectations to the new market realities and buyers accept that there are few homes offering deeply discounted prices,” said Roger Hance, president of the 8,900-member Southland Regional Association of Realtors.
“The coming months may show that buyers and sellers reassessed the changing market during February,” Hance said. “We’re confident that deep demand for housing will yield increased home sales, although minus the multiple-offer frenzy of 2012 and 2013 and with prices rising at a much slower, unhurried pace.”
Hance and Jim Link, the Association’s chief executive officer, believe the inventory will continue to swell as owners adapt.
“Affordability is becoming an issue throughout California,” he said. “We’re now back to where consumers must look to get the best value for their housing dollars, where they will refuse to overpay. Sellers always want to sell as high as possible, yet now they must ask themselves if they are asking too much?”
The median price of homes sold during February came in at $475,000, up 12.6 percent from a year ago, yet down 2.1 percent from this January. The condominium median price of $307,500 was up 18.3 percent from 12 months ago, yet it, too, fell 2.4 percent from January. Both median prices peaked last year—homes at $520,000 in May and September; condos at $330,000 in July and again in October—and have been seeking a new level as traditional buyers recaptured the market.
Of the total closed escrows reported last month, 82.8 percent were standard sales. Real Estate Owned sales, properties acquired by lenders typically through foreclosure, fell to 5.9 percent of the market, while short sales, where the lender accepts a sale price lower than the outstanding loan, came in at 10.2 percent, the lowest share since the Association started keeping that statistic. REOs and short payoffs accounted for 34.6 percent of total sales a year ago, which even then was well below the recession peak.
February statistics, which reflect December and January activity, reported 320 single-family closed escrows, down 16.0 percent from 2013 and off 8.3 percent from the January tally. It was the lowest monthly sales total on record, beating the prior low of 323 sales set in January 2008.
Realtors also closed escrow on 122 condominium sales, off 25.2 percent compared to February 2013 and 19.7 percent below December. It was the lowest total since 109 condos closed escrow in February 2008.
Hance and Link said they were unsurprised as buyers pulled back from what in some instances were overinflated list prices.
“It’s a welcome pause, it’s an indication that buyers understand market dynamics and will not be rushed into overpaying,” Link said. “I’m optimistic for the Spring and the rest of the year, yet market activity truly begins with sellers’ willingness to price appropriately. At that point, we’ll see if lenders agree with the price and if buyers can afford it.”
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.