Home and condominium sales throughout the San Fernando Valley posted sluggish results during February while the median price of condominiums that changed owners hit its highest mark since 2007, the Southland Regional Association of Realtors reported Tuesday, March 21.
Realtors helped close escrow on 322 single-family homes last month, off 6.7 percent from a year ago, while the 135 condominiums that changed owners was down 10.6 percent compared to February 2015.
“It’s not unusual for February closed escrows be soft since they represent activity over the closing months of the prior year when people are less likely to move because of the holidays,” said Gina Uzunyan, the 2016 president of the 9,500-member Southland Regional Association of Realtors. “Fewer closed escrows also reflect the ongoing lack of inventory and the diminishing number of households that can afford to buy as resale prices march higher, even if the pace of increase has slowed dramatically.”
Nonetheless, Uzunyan expects resale activity to perk up in the coming months and for 2016 to see a busy local resale market, especially now that regulators decided to not to raise interest rates.
“Interest rates on home loans increased slightly earlier this year, yet remain very desirable,” Uzunyan said. “Low rates keep the market humming.”
The median price of the 322 single-family homes that changed owners last month came in at $561,000, up 6.9 percent from February 2015.
Home resale prices appear to have plateaued with the high point coming in July when the median price was $600,000. That was 14.4 percent below the record high $655,000 home median price set in June 2007.
The condominium median price continued to climb with February’s median of $380,000 up 10.0 percent from a year ago, a number not seen since 2007, yet still 8.4 percent below the record-high condo median price of $415,000, which was set in February 2006.
“As affordability looms larger, we’ll see single-digit increases replace the double-digit gains in the median prices, even if the inventory stays tight and competition stays heavy,” said Jim Link, the Association’s chief executive officer. “Unlike last decade, buyers today balk when they hit a certain price point. Smart buyers simply refuse to go higher if they think a property does not merit the price.”
Link and Uzunyan agreed that stricter lending requirements and tougher appraisals would keep increases in check, unlike the build-up to the recession during the last decade.
They also noted that there are still plenty of buyers available, but that the supply of homes listed for sale is unlikely to swell anytime soon.
There were 1,300 homes and condominiums on the Multiple Listing Service operated by the Association at the end of February. That was down 6.7 percent from a year ago and represented a 2.8-month supply at the current pace of sales, which was unchanged from a year ago.
A 6-month supply is desired, yet that may be wishful thinking with a target 4-month supply being more realistic, especially as people, particularly Baby Boomers, stay in homes longer, Link said.
Standard sales continued to dominate the market with 90.4 percent of home and condominium closed escrows during February falling into that category. Sixteen transactions were foreclosure related, for a 3.5 percent market share, while 23 homes and condominiums, or 5.0 percent of the February combined residential total, used a short sale to change owners.
The Southland Regional Association of Realtors® is a local trade association with more than 9,500 members serving the San Fernando and Santa Clarita Valleys. SRAR is one of the largest local associations in the nation.
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