An extremely tight inventory limited home sales during November, but 2009 already has exceeded activity posted a year ago, the Southland Regional Association of Realtors reported on Tuesday, Dec. 28.
Once December sales are added in, the year likely will be 5 percent to 8 percent ahead of 2008 for two years of increased activity after four consecutive years of declines, including 34.9 percent and 24.7 percent drops in 2007 and 2006 respectively. For comparison, 2008 was 13.1 percent higher than 2007.
Condominium sales for 2009 will post the first increase in annual sales after six consecutive years of declines, half of which were double digit, including a 33.2 percent drop in 2007. Through November the condo total already was up 4.5 percent over a year ago. Even with only minimal activity in December the annual condo total could well surpass 2008 by 10 percent.
"Given the intense competition for properties priced under $500,000, many more homes and condos would have changed owners during 2009 if only there had been more properties listed for sale," said Ana Maria Colon, the 2009 president of the Southland Regional Association of Realtors. "Active listings are half of what they were a year ago, creating a situation where dozens of buyers are scrambling over each other every time a new listing hits the market."
Colon and Jim Link, the Association's chief executive officer, expect banks in the coming months to release more properties they acquired through foreclosure, but no one knows the extent of what's called the "shadow inventory" or how quickly those properties will hit the market.
"Current demand most likely will be able to absorb how ever many properties banks release," Link said. "Yet the market will not return to normal until it works its way through all distressed properties and traditional sellers return in greater numbers."
A total of 2,888 properties were listed for sale at the end of November throughout the San Fernando Valley. That was 48.4 percent below the 5,598 listings of a year ago, which was within the 5- to 6-month supply that experts say represents a balanced market. The inventory at the end of November was a mere 3.7-month supply, tipping the balance in favor of sellers.
The increased competition and tight supply stopped the month-to-month slide in resale prices. The median price of homes sold during November was $395,000, up 5.3 percent over October and 1.3 percent ahead of a year ago November.
The 2009 annual median price most likely will come in 10 percent to 15 percent below 2008, which would be a dramatic improvement following the 28.6 percent drop in the annual median price. It will mark only the second consecutive year that the annual median has declined, after 11 consecutive years of mostly double-digit gains, some of which were in excess of 20 percent.
After setting a record high of $394,917 in 2006, the condominium annual median price has been sliding and is likely to post the second consecutive double-digit decline in the annual median price, probably exceeding 20 percent. The condo median has been firming up and showing gains on a month-to-month basis through this year after hitting bottom in January with a median of $190,000. Since June, the condo median has been at or above $225,000.
"Low interest rates combined with extension of the $8,000 tax credit for first-time buyers and extension of a $6,500 tax credit for repeat buyers are sure to bring even more buyers into the market," Colon said. "Everyone is hoping for great deals, which are available compared to years ago, but many buyers are disappointed because they failed to come with professional representation and too often are unprepared for the intensity and quick action needed to win in today's bidding wars."
A total of 582 single-family homes changed owners during November compared to a year ago, a drop of 8.1 percent. Condo sales of 201 units fell 11.8 percent from a year ago, but rose 1.0 percent from this October. Both declines were attributed to a lack of inventory and seasonal factors.
Pending escrows, a measure of future resale activity, suggest a slight uptick in activity through December and January. Some 783 escrows were open at the end of November, up 1.5 percent from a year ago.
The Southland Regional Association of Realtors® is a local trade association with more than 10,000 members serving the San Fernando and Santa Clarita valleys. SRAR is one of the largest local associations in the nation.