Questions regarding housing affordability and still-too-tight rules for home loans contributed to fewer home sales, slower price appreciation, and a slowly rising inventory throughout the San Fernando Valley during September, the Southland Regional Association of Realtors reported on Tuesday, Oct. 28.
A total of 491 single-family homes changed owners, down 2.6 percent from a year ago. Realtors also helped closed escrow on 166 condominiums, down 17.0 percent from September 2013.
“We’re seeing a cooler, more balanced market where buyer and seller expectations are more aligned,” said Roger Hance, president of the Association. “Yet the market clearly would be more active if lending rules hit a better balance so that truly qualified buyers didn’t have to jump nearly impossible hurdles to land a loan.
“It looks like that is slowly happening,” Hance said, “but, in the meantime, it means fewer sales, which translates to slower economic activity and delays in the full recovery of the housing market. The pendulum has swung too far; the rules now are too tight. It’s time to let market forces, not regulatory manipulation, set the pace of sales.”
The 491 homes sold during September posted a median price of $535,000, up a mere 2.9 percent over 12 months ago and down 1.5 percent from this August, which was the highest median since November 2007. The high 20 percent and 30 percent price median price increases posted throughout all of 2013 fell to between 10 percent and 20 percent from January through April and have moderated to low single-digit gains since this May.
The condominium median of $315,000 fell 3.1 percent compared to a year ago while also falling 4.8 percent from this August. The condominium median peaked at $335,000 in August 2013 and has been bouncing around under that number ever since.
“Price rose too high too fast, increasing 37 percent over two years,” said Jim Link, the Association’s chief executive officer. “In addition to tight lending rules, affordability is the culprit for this slower market.
“Two years ago, first-time and median income buyers were being outbid for the ‘bargain’ distressed properties by cash-paying investors,” he said. “Today, traditional buyers, and especially first-time buyers, simply cannot qualify for the higher prices. Demand is there, but incomes and loans are lagging.”
Of the 408 homes and condos sold last month, 83.3 percent of the sales went to traditional buyers, while 5.1 percent were foreclosure related and 8.3 percent were short sales.
There were 1,852 active listings at the end of September, up 10.8 percent from a year ago. It was the 13th consecutive month of double-digit increases in the inventory, although September’s gain was the smallest to date.
Even with the increase in active listings, at the current pace of sales the inventory represents a 2.8-month supply. That was up from the 2.4-month supply of September 2013, yet well short of the desired 6-month supply that represents a balanced market.
September ended with pending escrows—a measure of future activity—totaling 698, up 1.6 percent over a year ago.
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.