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Erika Kauzlarich-Bird: Successful short sales require diligence, hardships

Posted: May 24, 2012 1:55 a.m.
Updated: May 24, 2012 1:55 a.m.
 

Record-low interest rates and favorable resale prices during first quarter 2012 made housing in California more affordable than at any other time on record.

The California Association of Realtors reported Monday that its Affordability Index rose to 56 percent, meaning that nearly 6-out-of-10 households could afford to purchase a median-priced, existing single-family home. The index is considered the most fundamental measure of housing well-being for homebuyers in the state.

Homebuyers needed to earn a minimum annual income of $55,688 to qualify for the purchase of a $276,040 statewide median-priced, existing single-family home in first quarter 2012.

The monthly payment, including taxes and insurance on a 30-year fixed-rate loan, would be $1,392, assuming a 20-percent down payment and an effective interest rate of 4.16 percent.

The effective composite interest rate in fourth quarter 2011 was 4.30 percent and 4.90 percent in first quarter 2011.
While investors have been busy for a long while, conventional buyers only recently have awakened to the extent of today’s opportunities.

Reports from Realtors throughout the San Fernando and Santa Clarita Valleys say that properly priced homes and condominiums, particularly in entry-level price ranges, frequently attract multiple offers. By the time a property goes into escrow the sales price often is well above the original list price.

Yet, that window of opportunity already is tightening, especially as the inventory of homes listed for sales falls to record lows. Throughout the San Fernando Valley, for example, first quarter 2012 saw a mere 1,945 average listings per month.
That compares to a 3,034 monthly average through 2011. Even at the worst of the housing meltdown the inventory rose to a monthly average of 6,633 in 2007, yet that was well below the inventory reported in the recession of the early 1990s when the monthly average inventory hit 13,300 in 1992.

Santa Clarita Valley had a mere 1,191 active listings at the end of April, that was down 43.9 percent from a year ago. It represented a mere 2.4-month inventory at the current pace of sales, a low number when a five- to six-month supply is desired.

In the San Francisco Bay Area, housing affordability rose or remained stable in all counties except Contra Costa County, where affordability declined by one percentage point. At 78 percent, San Bernardino County was the most affordable, while San Francisco County was the least affordable, with only 29 percent of households able to purchase the county’s median-priced home.

Los Angeles had 51 percent affordability — up from 46 percent a year ago — while Ventura came in at 50 percent, Riverside County at 66 percent, the Inland Empire at 71 percent, Orange County at 39 percent, and San Diego at 46 percent.

Nonetheless, even with prices bid up, buyers who land a home today enter the market with affordability at a record high and interest rates at a record low.

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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