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Low inventory marks home market recovery

Local Realtors advise sellers on how to navigate today’s market when listing their homes for sale

Posted: March 17, 2013 2:00 a.m.
Updated: March 17, 2013 2:00 a.m.

A Stevenson Ranch home. It's a sellers' market in the SCV but local Realtors say you can still benefit from following a few tips when listing your home for sale. For one thing, it helps to look at other homes for sale, including new homes. Doing so will help the homeowner decide what might be needed to make their home a great buy.

 


Editor’s Note: This is the first of a two-part series on the local real estate market. Today’s story focuses on the homeowner, or seller. The series concludes next Sunday with the focus on the buyer.

In a stabilizing real estate market, marked by rising home sales and moderate price gains, a severe shortage of homes listed for sale characterizes this particular housing recovery.

The lack of inventory in Santa Clarita is the “major factor slowing the ongoing market recovery, a reality that may push prices higher and faster than a more balanced process,” the Southland Association of Realtors, or SRAR, noted in a January press release. Inventory that month was down 65.6 percent from a year ago.

The market is slowly but steadily returning to a “standard” sale market, where homeowners have equity in their home when they list it for sale, said Bob Khalsa, of United American Realty and president of the SCV Division of SRAR.

“However, the inventory is not expected to go up dramatically,” he said. “With a low inventory, sellers can benefit from reduced time periods getting their property in escrow.”

For homeowners thinking of putting their home up for sale, local Realty experts have some advice.
Pricing is one key factor, SCV Realtors say.

Pricing
“Pricing is always important,” said Sam Heller with Keller Williams Realty. “In this market even pricing a home at a higher price may work, and should be tested for a couple of weeks. But remember, the buyer’s lender will need to bring in the appraisal (to match the sale price), or you may not close at the price you sold for.”

Pricing a home at 1 to 3 percent over fair market value is acceptable, said Connor MacIvor with RE/MAX. But, he agrees that any price set too high may run into a problem for the both seller and buyer if the appraisal price comes in lower.

To arrive at reasonable sales price, MacIvor said trends in pricing also need to be taken into consideration. In the time period between September 2012 and March, there were two short periods of price declines, he said.

In October and November, the median price of a SCV home dropped $10,000 to $360,000 according to SRAR; but that price rose to over $400,000 by the end of 2012.

Depending on the area, average prices can run higher than the median price, which measures the point at which 50 percent of the homes sold for less and 50 percent sold for more than that price.

For some homeowners, however, when their home sells too quickly, as is occurring more frequently in Santa Clarita – reminiscent of the housing recovery in the mid 90’s, sellers sometimes question whether their home was priced too low, MacIvor said.

That’s really not the case, however, local experts said. Appraisals have to come in close to the sale listing price so there’s a limit as to how high a price can be set. The shortage of homes listed for sale is really driving the quick sales, they said.

Preparing a home for buyers is important, but local Realtors caution sellers not to go overboard.

Staging
The local experts all agree that a home should be de-cluttered.

“If buyers cannot see through clutter, sometimes they can’t see the forest through the trees so to speak,” said Kathy Salisbury with Triple D Realty.

She advises sellers to ensure their home is clean, however, and that there are no smells from animals or smoke. And if the seller has clutter, including in the garage, or too much furniture, Salisbury advises sellers to move pieces to temporary storage if needed.

“Today’s home buyer is looking for a clean, move-in ready home,” said Cherrie Brown with Keller Williams Realty. “A buyer that is serious will pay fair market value, and maybe even over list price, to have a home that is ready to move in.”

But given current market conditions where inventories are critically short and homes listed for sale are generating bidding wars, it is not necessary to “stage” a home, Heller said.

And Salisbury cautions sellers not to do too much work on their home when preparing it for sale.

“Inventory is low and homes are selling,” she said. “Doing a lot of work may not always yield you your money back.”

Working with a Realtor to determine the few items that are needed to help the home sell is advised, and minimizes the investment a homeowner might make in a home they’re selling, local experts said.

It also helps to look at other homes listed for sale, including new homes, Khalsa said. Doing so will help the homeowner decide what might be needed to make their home a great buy.

Still, some homeowners remain hesitant to sell.

Advantages
For sellers who are looking to up-size or downsize their home, this is an ideal time, Khalsa said.

“Although you may get a lower price if you sell now in a rising market, you will have the benefit of lower capital gains tax - if it applies,” he said. “And you also have the advantage of lower mortgage interest rates now; and these (rates) are expected to rise.”

Sellers with enough equity in their existing home can purchase a new home, and put down a reasonable down payment, Brown said. And because interest rates are so low, many sellers end up buying a larger home, but making lower monthly mortgage payments.

“We have a client who is 28 years old and moving up to their second home to raise their family,” Brown said. “They will have the same monthly payment on a single-family home, compared to what they have been paying for their condo.”

Still, Realtors come across homeowners who fear selling their current home before they find a new home.

Options
“Homeowners can sell their home, with a contingency noted to first find the home of their choice,” Brown said. “That is becoming more common now that we are in a market where we have more standard sales and move up buyers.”

Also, sellers can sometimes rent their homes back for a period, after they sold the home, Heller said.

And there are sellers who want to buy another home, while putting their existing home on the market for lease, keeping it as an investment.

“If a seller wants to keep their home for a rental, however, they need to talk to a good lender before putting their home on the (lease) market,” Salisbury said.

“For those with high equity in their homes, selling their house first and going into the market as an all cash buyer, or with a high down payment, puts you in the driver’s seat and gives great negotiating opportunities when making offers on homes,” Khalsa said.

 

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