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Despite tight inventory, August home sales rise

Posted: September 27, 2012 2:00 a.m.
Updated: September 27, 2012 2:00 a.m.
 

I’m happy to note that existing home sales continued to improve in August nationwide and throughout California while the national median price rose on a year-over-year basis for the sixth consecutive month.

In fact, the median resale price in California reached a four-year high and Golden State home sales recorded the fifth month of consecutive year-over-year sales gains.

National and even statewide numbers can be misleading because in many instances individual communities — indeed, separate neighborhoods — often represent unique markets that are at varying stages of recovery. Yet the housing market in the Santa Clarita Valley is also improved over just a short while ago.

August sales reports were unique in that they illustrated a consistent trend emerging at all levels of the economy — housing is showing clear signs of recovery, with even new home construction starts again in positive territory.

The positive national trend is emerging even as individual communities report a second trend that illustrates an ongoing problem — an extremely tight inventory that is constricting sales.

Indeed, that was the case during August in the Santa Clarita Valley where home sales were virtually unchanged from one year ago. Sales have slowed not for lack of buyers, who are submitting multiple offers on virtually every property listed for sale, but because there simply is not much available.

I believe we’ve hit a point in the market where the limited inventory, particularly the falling percentage of bank-owned properties, is restricting choices. With inventory posting month-after-month declines of 60 percent or more, is it any wonder that sales are slowing while prices are rising?

Despite a record-low inventory, Santa Clarita home sales remained virtually unchanged from a year ago, off 0.9 percent, while condo sales increased 9.6 percent.

“Inventory is falling partly because there has been a drop in the number of bank-owned properties coming on the market,” said Jim Link, the Association’s chief executive officer. “Traditional equity sales are rising and inventory will gain further momentum as resale prices increase enough to give owners who owe more on their homes than its current resale value a chance to sell.”

Inventory has been plunging since 2007 when the economy went into free fall, a pattern different than what was seen in the recession of the early 1990s when nothing was selling and listings in soared off the chart.

Even at its worst, this so-called Great Recession never saw local listings pile up in huge numbers.

We continue to see strong demand in the local markets, but, like most of California and the nation, sales are hindered simply because there is hardly anything to sell.

That translates into more multiple offers and higher prices, yet no one is predicting a helter-skelter run up in prices like the madness of the last recession. What would be nice to see, is a steady, consistent, predictable market where prices rise slightly over time, driven by laws of good, old fashioned laws of supply and demand. Now, wouldn’t that be a nice market?

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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