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Bob Khalsa: Real Estate Talk

SCV home sales are the highest for January in six years

Posted: March 1, 2013 11:31 a.m.
Updated: March 1, 2013 11:31 a.m.

Bob Khalsa

 

January is typically a dormant time of year for the residential real estate market in the Santa Clarita Valley, yet this market recovery is so unusual that no one was surprised when statistics showed January posted the highest sales total for the month in six years.

Sales were up a mere 2 percent from a year ago January, yet that was enough to get everyone’s attention.
A total of 149 single-family homes changed while Realtors also closed escrow on 59 condominium sales. That last number was down 7.8 percent from a year ago, not for lack of interest from swelling ranks of buyers, but simply because there are so few properties listed for sale.

Both categories were down from December totals, which followed seasonal patterns, yet the drops — 39.7 percent and 50.8 percent, respectively — were more pronounced because this December was one of the busiest months in years — the strongest indicator to date of the ongoing recovery of the local home resale market.

There are plenty of buyers out there, traditional as well as investors, yet inventory is so low and lending standards still so high, that we’re unable to satisfy demand.

If you have equity in your house, along with a desire to make a change, it’s a great time to list for sale. You’ll benefit on both transactions, and capture a low interest rate. Listing now positions you for the busy Spring home-buying season.

Indeed, the lack of inventory is the major factor slowing the ongoing market recovery, a reality that may push prices higher and faster than if the process was more balanced.

There were 325 active listings at the end of January, down 65.6 percent from a year ago and a mere 1.6-month supply at the current pace of sales. That was up from the record low 320 active listings in December — the fifth consecutive record low — yet still well below the 5- to 6-month supply that represents a balanced market.

With tight loan underwriting rules limiting options for the swelling ranks of traditional buyers, investors with all-cash offers are casting their vote of confidence in the local market.

The hunger for listings is so intense that I listed a property at 8 p.m. a week ago Monday only to have 12 offers on it by 2:30 p.m. the next day. Six more prospective buyers were clamoring to view the property.

None of the offers came from prospective buyers who had even seen the property; all 12 were all-cash offers; and, all of the offers were at list price, with the exception of one offer, which was significantly higher than list.

“Activity is picking up in all price ranges,” said Jim Link, the chief executive officer of the Southland Regional Association of Realtors, “yet for properties priced under $350,000 we’re seeing heavy investor activity along with plenty of all-cash purchases.”

The Association’s statistics indicated that of the properties that changed owners during January, 47.3 percent were traditional, standard purchases, 35.7 percent were short sales, where the lender allows the sale for less than what is owed, and 16.4 percent were REOs, or Real Estate Owned properties typically acquired by lenders via foreclosure.

“More and more properties are selling the traditional way,” Link said. “As that number increases, short sales and REOs will fall. That’s when you’ll see the market improve even more.”

The 149 single-family homes that changed owners last month had a median price of $360,000, which was unchanged from a year ago. The condominium median price of $206,700 was up 12.0 percent from January 2012.

With today’s heavy demand there would be more condominium listings and sales if homeowner associations took steps to be FHA qualified, which would open low-cost financing to more prospective traditional buyers.

Buyers want condominiums, because they are entry-level units, but the loan options are limited.

Failing to obtain FHA approval exacerbates the problems even for condominium complexes that meet all criteria — limiting listings and limiting sales, while making it more likely that units that do sell go to investors, who typically rent the units, thus making it even less likely financing will be available for traditional buyers.

I don’t expect any major surprises this year, yet it will be very interesting to observe what unfolds for Santa Clarita Valley residential real estate as daylight hours get a little longer and each day gets a little warmer.

Bob Khalsa 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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