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Erika Kauzlarich-Bird: There are good signs everywhere in the SCV

Real Estate Talk

Posted: April 12, 2012 1:55 a.m.
Updated: April 12, 2012 1:55 a.m.
 

Santa Clarita Valley housing statistics already support state and nationwide trends, making it even more noteworthy when 38 real-estate-related economists and analysts see broad improvement for the economy and residential housing.

There are signs popping up everywhere that prospects for housing are improving. Let us count (some of) the ways:

Jobs? Up. Personal debt? Down. Foreclosures? Declining. Savings? Up. Car sales? Up. Travel? Up. Hotel occupancy? Up. Statewide, pending home sales? Up. New home construction? Rising. Home loan interest rates? Still incredibly low.

Even the stock market seems to be cooperating with some retirement accounts, recouping much that was lost in the crash. Yes, Alice. It may be safe to look at your 401(K) again.

So, what about home resale prices? That’s where getting 38 economists to agree is of particular interest.

The recent report by the Urban Land Institute’s Center for Capital Markets and Real Estate said prices will stabilize further this year and rise 2 percent in 2013, with a bigger boost of 3.5 percent in 2014. Every uptick in resale prices eases the pressure on the 1-out-of-5 owners who still owe more than the current resale value of their house.

Some analysts believe the price decline has stopped for homes not now in foreclosure, although resale prices will remain soft until distressed properties move through the market.

The economists also forecast that new housing starts will nearly double by next year. They foresee rental prices continuing to increase for all property types, ranging from 0.8 percent to 5 percent.

All that is based on the premise that the economy will strengthen even more, while unemployment will drop even lower.

Keep in mind that the improvement seen since the pain started in 2007 could vanish with a market crash here or a global economic calamity there, yet the survey reflects a solid, new-found confidence that the economy has weathered the worst of the financial storm, while more improvements are likely over the next three years.

Indeed, Realtors are reporting significant gains in buyer interest with much of it organic demand that has been pent up for years, not just demand generated by the best housing affordability in a generation. 

No doubt investors and bargain hunters prowl a tight local inventory hunting for deals, yet what Realtors see now are growing numbers of people who need a home. Just a home. A place to raise their kids, not bankroll the future.

Conservative appraisals and tight mortgage underwriting still kill too many sales, however, those impediments most likely will disappear as foreclosures and short sales subside. When that happens, inventories will see the return of conventional sellers and more lenders will return to the residential housing market.

That’s the “normal” market Realtors pray for and believe is on the horizon. The percentage of equity home sales increased statewide during February while the total share of all distressed properties fell to 48.9 percent. That compares to 55.2 percent a year ago February, the California Association of Realtors reported.

Pending sales — a measure of future resale activity — gained ground in February, the tenth consecutive month that pending sales were higher than the previous year.

The Santa Clarita Valley already is well into recovery, while distressed properties are still too common in the parts of the San Fernando Valley. Yet, soon enough the pain will be a mere memory and we’ll tell tales about how we weathered the crash.

Erika Kauzlarich-Bird 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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