While home sales and inventory followed typically upbeat seasonal patterns, the resale housing market in the San Fernando Valley during March remained in a readjustment phase that likely will continue until buyers and sellers adapt to the rules of the new market, the Southland Regional Association of Realtors reported on Tuesday, April 21.
Association officials were “guardedly optimistic” that the slowdown would not be prolonged and that the summer home buying season, barring any unexpected negative economic news, would post solid numbers.
A total of 414 single-family homes closed escrow during March, up 29.4 percent from February totals, yet down 16.9 percent from March 2013. Similarly, condominium sales of 136 units were up 11.5 percent from February, but 31.0 percent below 12 months ago.
“Residential real estate has always had up and down cycles,” said Roger Hance, president of the Southland Regional Association of Realtors, “but this time the recovery is taking longer because the up was so high for so long and the down was so profound. The market is much stronger today, yet why would anyone expect full recovery of the housing market to happen quickly, especially before a full economic recovery?”
Hance noted that foreclosure-related sales and short sales have largely vanished, with standard buyers responsible during March for a record-high 88.0 percent of all closed escrows. REO sales represented a mere 2.7 percent of total sales last month, while short sales accounted for 7.8 percent, a record low.
“It stands to reason that the market would slow down now that the bargains and deeply discounted prices are gone,” said Jim Link, the Association’s chief executive officer. “I’m optimistic, but I truly believe we’re in a holding pattern, waiting for buyers to accept that they cannot get bargain-basement prices and for sellers to understand there is a clear limit on their asking prices.”
Hance agreed, noting: “Any home seller who hopes to reap prices seen at the top of the last boom market will have a long, long time to wait. The fundamentals of this market are totally different.”
Both expect price increases to moderate in the coming months. The 414 single-family homes sold during March had a median price—meaning half were price higher, half lower— of $515,000. That was up 19.8 percent over the March 2013 median price, but below last’s peak price of $520,000.
Similarly, the median price of condominiums sold last month came in at $325,000, up 15.7 percent over the prior year, but below the 2013 high of $335,000. The condominium median price has recovered 75.7 percent from its record-low of $185,000 set in May 2009.
Inventory showed signs of growing, though remains well below what is needed to put additional downward pressure on prices. The active inventory of 1,520 listings reported at the end of March was up 49.8 percent over a year ago. That’s a solid gain, yet represents a 2.8-month supply at the current pace of sales in a market were a 6-month inventory offers balance to the market.
Hance advised buyers to “put a lot of emphasis on the quality of their credit history, making that a high priority.” Also, before hunting for a home, he said, concentrate on finding an experienced real estate professional, advance planning, tapping all potential sources for a down payment, and getting fully prequalified for a loan.
Sellers, Hance noted, need “to develop a strategy.” Sellers also need to get their credit in order so they’ll be ready to buy a replacement residence. A top Realtor would help sellers develop a long-term strategy, Hance said.
“Give yourself several months to put the house in tip-top condition,” he said. “Understand that when you list impacts the price and the speed of the sale, but also that a premium price can be asked for homes that are in good shape, homes that are move-in ready.”
Regardless of the economic environment, he said, every real estate market offers clear opportunities to buyers and sellers who are willing to develop a plan and stick to 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.