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Erika Kauzlarich-Bird: Double-digit gains give plenty of encouragement

Posted: July 5, 2012 1:55 a.m.
Updated: July 5, 2012 1:55 a.m.

May marked the fourth consecutive month that pending home sales — a guide to future activity and where the market is headed — posted double-digit gains throughout California.

Local activity in the Santa Clarita and San Fernando valleys confirm numbers in a recent report from the California Association of Realtors.

Pending sales during May in those two valleys rose 20.2 percent and 11.2 percent, respectively. I fully expect to see similar numbers, modest price gains and improved sales when June statistics come out in the weeks ahead.

Additionally, the share of distressed sales continued to decline from year-ago levels, signaling a return of non-investors to the housing market, along with a willingness by owners with equity to list their homes for sale.

May marked the 13th consecutive month that pending sales statewide were higher than the previous year.

“Despite a slowdown in economic growth in recent months, sales in California remain strong as record-low mortgage rates and favorable home prices continue to fuel demand for homes,” said CAR President LeFrancis Arnold. “The strong results in pending sales – double-digit year-over-year gains in the last nine out of 10 months — suggest solid housing market performance for the state in the upcoming months.”

Additionally, the share of equity sales — or nondistressed property sales — compared with total sales, improved further in May. The share of equity sales rose to 59.3 percent in May, up from 55.8 percent in April.  For comparison, equity sales made up 51 percent of all sales in May 2011.

Likewise, shares of REOs — real estate-owned property held by lenders — and short sales sold statewide decreased in May, with the share of REO sales dropping markedly from a year ago.

The combined share of all distressed property sales fell to 40.7 percent in May, down from April’s 44.2 percent and from 49 percent in May 2011.

The share of short sales declined in May to 19.4 percent, down from 20.6 percent in April and from 20.3 percent a year ago. Of the distressed properties, the share of REO sales declined further in May to 21 percent, down from 23.2 percent in April and 28.4 percent in May 2011.

All in all, while multiple issues and challenges remain, the local housing numbers are looking much brighter and the local market is improving and gaining momentum.

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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