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Erika Kauzalrich-Bird: Statewide home prices post first increase in 16 months

Real Estate Talk

Posted: April 26, 2012 1:55 a.m.
Updated: April 26, 2012 1:55 a.m.
 

Like daffodils popping up through lingering drifts of winter snow, the California housing market is showing multiple signs that it is emerging from its long slumber, not the least being that the median home price posted its first year-to-year increase in 16 months.

While home sales were down statewide during March, there are pockets of strong activity, including right here in the Santa Clarita Valley. Southern California saw sales rise nearly 3 percent. Prices throughout the region either posted gains or suggested a clear deceleration in price declines.

Indeed, here in the SCV, sales followed seasonal patterns by rising 30.4 percent from February, while coming in a strong 9.1 percent above the prior year. The local single-family median price of $378,100 was up 1 percent compared to March 2011.

An extremely limited inventory of homes listed for sale is the primary obstacle preventing the market from posting even more sales. That’s especially true for condominiums and the reason why condo sales were off: There simply are not enough listed for sale.

“Tight inventory and robust home sales … fueled the substantial increase in the March median home price,” said LeFrancis Arnold, president of the California Association of Realtors. “Sales jumped significantly in most regions of the state, with many areas experiencing double-digit gains.”

Much of the activity has been centered in the lower price ranges and much of it fueled by investors willing to plop down all cash to grab a bargain. Those homes are moving very quickly while higher priced properties tend to linger longer.

Yet traditional, conventional homebuyers are slowly returning to the market and in recent months have outnumbered investors.

No doubt there are short sales and foreclosures that still must move through the system, yet the recent national settlement with five major banks along with improvements by lenders of their internal systems should speed the remaining distressed properties through the system much faster than earlier efforts.

Don Faught, president-elect of the California Association of Realtors, points to three metrics that confirm housing is back on an upward trajectory: inventory, time on the market and spread.

Inventory has dropped 30 percent over the last year to 5.3 months, due to a limited number of foreclosed properties and homes with delinquent mortgages hitting the market. Traditional sellers are still holding back to see if prices will improve, ignoring the fact they’ll also pay more to buy a replacement home.

In the Santa Clarita Valley, the total number of properties listed for sale in March was down 17.8 percent, representing a mere 2.9-month supply. We’ve been seeing similar substantial drops in inventory for multiple months.

California homes are also selling faster. Time on the market for single-family homes has decreased 9 percent to 59 days and condos 7 percent to 67 days. And finally, the spread between asking and selling prices is narrowing.

First-time homebuyers are still looking for steals and not looking for a deal. The marketplace has improved over the last three years, yet people are still writing offers under the asking price, when they should be writing offers at asking price.

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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