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Finding a house difficult in SCV market

Low interest rates, pent-up demand and hike in confidence cited as reasons

Posted: April 22, 2012 1:30 a.m.
Updated: April 22, 2012 1:30 a.m.

Local home sales were up in March, but the inventory of houses listed for sale is shrinking, forcing homebuyers into competitive bidding wars, according to Santa Clarita Valley Realtors.

 

When the employer of Tina Ham-Yoo’s husband relocated him to Santa Clarita from Washington, D.C., the couple expected to buy a home in the area pretty easily. But the couple was in for a surprise.

“It just was not what we expected,” Ham-Yoo said. “We thought there was certainly more inventory, and given the recession, that it would be a buyer’s market.”

One year ago, there were 21-percent more homes on the market in the Santa Clarita Valley, according to statistics compiled by the Southland Regional Association of Realtors.

According to SRAR, there were 585 homes listed in March 2011, compared  to only 460 homes in March 2012.

 

The number of homes listed for sale in March is down 59 percent from the peak in March 2007, when 1,121 homes were listed for sale.

Yet, the number of homes sold is one of the highest March figures in the last four years. In March 2008, 299 homes were sold, 336 were sold in 2009, 354 sold in 2010 and 310 homes were purchased in 2011.

In March 2012, 348 homes sold in the Santa Clarita Valley, beating records for the past five years except for March 2010 when federal and state tax incentives were available.

But the dwindling inventory is leading to bidding wars over homes, local Realtors said.

Bidding wars
“It’s crazy right now,” said Tom Delgado, the Ham-Yoos’ Realtor with Keller Williams VIP Properties in Valencia.

“Here you are in these tough economic times, yet at same time, in the range from the $200,000 mark all the way up to the $650,000 range, you’re fighting competition,” he said.


Ham-Yoo said she and her husband were getting discouraged under the time constraints to find a home. Her husband’s employer provided him only with a short-term, expense-paid hotel stay while he looked.

“On the one hand, (the competition) is good. It shows the economy is recovering,” Ham-Yoo said. “But on a personal level, it hasn’t been good for us. You can’t ask for closing costs or any incentives.”

There are people out there who still want to believe this housing market is in ruins and that Santa Clarita is the same as other markets, Delgado said. But strangely enough, the local market is aggressive and getting more so.

The Ham-Yoos made an offer on five homes in their ideal price range of $450,000 to $550,000 — above the price range in which investors have typically been snapping up homes for cash.

“We were squeezed out because of multiple offers,” Ham-Yoo said.

Delgado wrote an offer that exceeded the list price on one home, but the couple was quickly outbid by six others. The listing agent finally stopped accepting bids, Delgado said.

Today, the Ham-Yoos are in a 30-day escrow on a $513,000 home in Stevenson Ranch.

Meanwhile, other buyers are struggling the same way the Ham-Yoos did before they found their house.

More hurdles
The critically low inventory of homes for sale in Santa Clarita has created a significant advantage for homebuyers with bigger down payments and better qualifications, said Realtor Robert Mickalson with Realty Executives in Valencia.

The competition exists because of low interest rates, pent-up demand and increasing consumer confidence, local

Realtors say. But sellers won’t see the rapid price accelerations they saw during the real estate bubble. There’s a limit as to how high bidders will go over asking price, Delgado said.

Many buyers may be limited by the amount of money they were prequalified to spend, and if they offer more on a home, they will have to come up with the difference out of their own pocket, he said.

Another hurdle is that property appraisals often will no longer support the higher sales price. Sellers may have to come down in price if the winning buyers can’t secure sufficient financing, local experts say.

“We are now in a trough where it will take four to six years before the market will elevate up,” Delgado said.

Compromise
Denise Wallig moved to the SCV in August 2011, and began looking for homes every weekend since September 2011.
Having worked as an occupational therapist, but as an independent contractor for 17 years, Wallig accepted a job and waited six months so she would be a stronger candidate to prequalify for a home loan.

“I noticed the market began changing around December,” Wallig said. “There were fewer open houses, less good deals, less foreclosures and the prices seemed to be increasing for like-floor plans.”

Wanting to find a home that would allow her daughter to remain in the Placerita Junior High School district, Wallig said she went out with her Realtors every day for the past month to look at houses.

“It was insane,” Wallig said. “This is the third house I’ve bought, and I’ve never experienced what I experienced in the past month. I thought it would be a buyer’s market but that wasn’t my experience.”

Four different offers were written for houses, and all became involved in bidding wars, said Cherrie Brown, Wallig’s Realtor with Keller Williams VIP Properties in Valencia.

Wallig said she also lost out to investors able to pay with all cash. But finally, she finally landed the home of her dreams, a short sale, when the bank wanted a buyer — not an investor — who would live in the house.

When she first began looking for homes, Wallig targeted the $250,000 price range. By the time she had been employed six months and was prequalified to buy a home, she had to adjust her price range to over $350,000.

“If I could have bought last year, I probably would have gotten the home for $20,000 to $30,000 less,” she said. “But I was willing and able to compromise to get what I wanted.”

Changing market
Realtors cautioned that patience is required by anyone thinking about venturing into the homebuying market.

Rather than trying to convince his buyers the local market was very competitive, Delgado said he takes his clients out to a house on a Saturday as car after car arrive to look at the same home. It allows his clients to witness the competition themselves, he said.

“Those who need to purchase a home and move prior to summer could find themselves without a home to buy if they continually run into multiple-offer situations against other competing Santa Clarita homebuyers,” Mickalson said.

Indeed, the number of active listings dropped again in the past month.

There were 844 listings as of March 16, said Brown. By April 19, there were only 665 listings, a 21 percent decline.

The number of standard sale listings where owners still have equity in their home hasn’t changed, but the number of distressed homes that experts spent the last three years saying would hit the market — is shrinking.

Listings for local short sales dropped 30 percent, and bank-owned listings declined 34 percent in the past month, Brown said.


With the scarcity of listings and the amount of qualified buyers, we are seeing multiple offers on properties and buyers are being outbid, said Erika Kauzlarich-Bird, owner of Triple D Realty and president of the SRAR SCV Division. “This makes it a positive gain for sellers in the current marketplace.”

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