Despite low interest rates on home loans and a rising inventory, home buyers hesitated during August with home sales off nearly 15 percent from a year ago and the median price of single-family homes sold in the San Fernando Valley up 6.5 percent, the Southland Regional Association of Realtors reported on Friday, Sept. 26.
A total of 478 single-family homes closed escrow during August, down 14.8 percent from August 2013 and down a nearly equal 14.9 percent from the total sold this July. Similarly, 186 condominiums changed owners during August, off 24.7 percent from 12 months ago and 5.6 percent lower than July 2014, which was the highest total at 197 sales so far this year.
“It’s not that people don’t want to buy, or that they don’t have the money or a job, or fail to recognize that interest rates remain low,” said Roger Hance, president of the Association. “Instead, there is a hesitancy, an overall attitude, that perhaps prices have recovered too quickly. Buyers want some assurance that they’re not purchasing at the top of the current market and sellers have to be realistic on where they set their price, recognizing that price increases have slowed down and buyers will not overpay.”
The median price of homes sold during August came in at $543,000, up 6.5 percent from a year ago and 4.4 percent higher than July. It was the highest single-family median price since November 2007, yet remains 17.1 percent below the record high of $415,000 set in February 2006.
The condominium August median price of $331,000 was down 1.2 percent from a year ago, which was the high point to date of the recovery at $335,000, and up 7.1 percent from July.
"Home ownership remains a priority for most households," said Jim Link, the Association’s chief executive officer. "But tight lending requirements slowing down the loan qualifying process, coupled with concern over job security and the overall economy, has caused a hesitancy among many would-be buyers.
“It is especially tough on first-time buyers,” Link said, “who not only have to come up with higher down payments required by today's lending standards but also deal with existing outstanding debt, such as student loans."
Link noted unlike a short while ago, when multiple offers and zero contingencies were prevalent, now a growing number of sellers include a contingency saying the sale is dependent upon the seller purchasing a replacement residence.
“Premising a sale on the buyer finding another house slows the process down,” Link said. “Yet that could be a good thing, a development that may well yield greater market stability.”
Link and Hance noted that the inventory of homes listed for sale is rising, yet remains relatively tight for homes priced under $400,000, which squeezes first-time buyers.
The 1,910 active listings at the end of August was the highest total since February 2012 and up 21.0 percent over a year ago.
At the current pace of sales, the inventory represents a 2.9-month supply, the second highest so far this year. Since bottoming out in July 2013, the inventory has been posting double-digit increases, although the increases have slowed compared to the 50 percent jumps reported earlier this year.
Distressed sales have virtually vanished from the local market. Of the 664 total sales reported during August a record-high 90.7 percent were traditional standard sales. Short sales came in at a record-low 5.1 percent, while foreclosure-related sales were a mere 3.2 percent.
The Southland Regional Association of Realtors® is a local trade association with more than 8,900 members serving the San Fernando nd Santa Clarita Valleys. SRAR is one of the largest local associations in the nation.
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