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Bob Khalsa: Santa Clarita Valley home, condo prices surge to highest since 2008

Posted: August 1, 2013 2:00 a.m.
Updated: August 1, 2013 2:00 a.m.

Bob Khalsa

 

Not surprisingly, home and condominium resale prices throughout the Santa Clarita Valley during June soared to the highest levels since 2008, while limited inventory, rising prices and higher interest rates yielded a decline in sales of single-family homes.

The price increases help underwater owners and hinder some sales, while boosting overall public confidence that the housing market is in recovery mode.

June’s single-family median price of $430,000 was the highest since October 2008. It was up 19.4 percent from a year ago June and 2.3 percent higher than this May.

While up 26.5 percent in June from the record low for this cycle of $340,000 in November 2011, the June median price was down 33.1 percent from the record high of $643,000 set in April 2006.

Similarly, the median price of condominiums that closed escrow in June soared to $263,000, its highest level since August 2008. The condo median price was up 34.9 percent from June 2012 and 11.9 percent ahead of this May.

While condo prices were up 54.7 percent from the record low in July 2012, they were still down 33.8 percent from the record high of $397,000 set in January 2006.

Rising prices are an enormous help for homeowners who owe more than the current resale value of the house, lifting them ever closer to a positive equity position. Yet rising prices and higher interest rates also narrow the pool of prospective buyers. Regardless, satisfying demand will be difficult unless inventory increases.

The 428 active listings — a 1.4 month supply at the current pace of sales when a six-month supply is needed — reported at the end of June were down 21.3 percent from a year ago, yet that total was remarkably different from prior months.

It was the first time since September 2012 active listings in the Santa Clarita Valley exceeded the benchmark of 400 listings, and the rate of decline in the inventory continues to slow down.

“The 21.3 percent drop in the active inventory from the prior year was the lowest decline since January 2012,” said Jim Link, the chief executive officer of the Southland Regional Association of Realtors.

I agree with Link in that a larger inventory would ease pressure on prices, which have been posting unsustainable increases, especially as sales pull back.

“Recent hikes in the interest rates may have some dampening effect on the market recovery,” Link said.
“Higher interest rates, coupled with higher prices means buyers qualify for a lower purchase price,” Link said. “However, rates are still just over 4 percent, so any resulting slowdown in sales may allow inventory to grow, while easing pressure on prices, which have been posting unsustainable increases.”

Santa Clarita Valley Realtors closed escrow on 199 single-family homes during June, down 16.4 percent from a year ago, yet up 1.5 percent from this May.

The total was 101.0 percent higher than the record low for this cycle, yet 50.9 percent below the record high.
A total of 104 condominiums changed owners, up 11.8 percent from June 2012 and 1.0 percent ahead of this May.

The June total was up 235.5 percent from the record low of 31 sales set in January 2008; 49 percent below the record high of 204 closed escrows in April 2003.

Interestingly, short sales remained high during June, but foreclosure-related property sales declined and standard sales continued to capture a larger share of the market.

Of the 303 closed escrows in June, standard sales accounted for 69 percent, short sales 23.1 percent, and Real Estate Owned sales 7.3 percent. It was the highest percentage of standard sales and the fewest REOs and short sales since the Association started keeping the statistic a year ago June.

Bob Khalsa is President of the Santa Clarita Valley Division of the Southland Regional Association of Realtors. David Walker, of Walker Associates, co-authors articles for SRAR. The column represents SRAR’s views and not necessarily those of The Signal. The column contains general information about the real estate market and is not intended to replace advice from your Realtor or other realty related professionals.

 

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