Sales of existing single-family homes and condominiums in the San Fernando Valley rose during September over year ago tallies fueled by low interest rates on home loans, the Southland Regional Association of REALTORS® reported Friday, Oct. 18.
REALTORS® helped close escrow on 453 homes and 169 condos, up 7.3 percent and 34.1 percent, respectively, from September 2018 as buyers rushed to temper high prices with interest rates that were the lowest in more than three years.
“Interest rates on home loans have been trending lower every month since peaking in November,” said Dan Tresierras, president of the Southland Regional Association of REALTORS®. “Today’s low rates have a profoundly positive impact in the quest to buy a home.”
The median price of single-family homes sold during September was $705,000, which was up 5.2 percent from a year ago, though down 3.2 percent from August. The record-high median price of $735,000 was set in July.
Similarly, the condominium median price of $440,000 was up 2.3 percent over September 2018 and down 3.3 percent from August. The condo record of $455,000 came in June and again in August.
Even though the median prices of homes and condominiums rose from a year ago, the income needed to qualify for an 80 percent loan actually fell for both categories.
For example, the $141,000 income needed to qualify during September for an 80 percent loan on a median-priced home of $705,000 was down 5.1 percent from a year ago due to the 3.61 percent interest rate. Twelve months ago, the national average interest rate on a 30-year home loan was 4.77 percent.
Likewise, the income needed to qualify for a median priced San Fernando Valley condominium of $440,000 was $88,000, down 7.7 percent from September 2018.
Median price means half of the 622 home and condo sales that closed escrow in September had a lower price and half had a higher price, which also mean there were dozens of sales completed for less than stated minimum incomes.
While bumped higher due to low rates, sales still followed seasonal trends, which see the market gradually cooling as winter approaches.
Current home hunters will have fewer options to choose from as the inventory fell during September for the fourth consecutive month.
“Every month in 2018 and through May of this year the number of properties listed for sale increased, sometimes by as much as 42 percent over the prior year,” said Tim Johnson, the Association’s chief executive officer. “But that stopped in June.”
September saw a 24.6 percent drop in active listings that translated to an 1.9-month supply at the current pace of sales, which generally is regarded as inadequate to meet current demand and ease pressure off prices.
“Normally, a tightening inventory would fuel further price hikes as sellers would be emboldened,” Johnson said, “but with prices at or near record highs, affordability becomes a limiting factor for many prospective homebuyers.”
Of the 622 homes and condos that changed owners in September, 604 or 97.1 percent were standard sales involving traditional buyers and sellers. There were two foreclosure-related transactions, 0.3 percent, and six short sales, 1.0 percent, where the lender agrees to a sale price lower than the balance of an existing home loan.
Pending escrows, which are a measure of future sales strength, totaled 662 at the end of September, which was up 14.3 percent.
The Southland Regional Association of REALTORS® is a local trade association with more than 10,300 members serving the San Fernando and Santa Clarita Valleys. SRAR is one of the largest local associations in the nation.
— 30 —