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Nancy Starczyk: Upbeat outlook for housing

Posted: February 26, 2014 2:00 a.m.
Updated: February 26, 2014 2:00 a.m.

 

The housing market in the Santa Clarita Valley started the New Year tentatively, yet encouraging news abounds as the traditional Spring home buying season approaches.

Rapidly vanishing distressed sales are first on the good news list.

Conversely, the demise of distress sales triggered the meteoric rise of equity sales, which is stunningly great news.

Foreclosure-related REOs, or bank-held real estate owned properties, and short sales have been in decline for many months.

Indeed, distressed sales statewide were down at the end of December by nearly two-thirds from a year ago, when their share of total sales was 35.4 percent. In December they accounted for 15.7 percent of California activity. Los

Angeles County reported nearly identical numbers for December.

Here in the Santa Clarita Valley, January ended with distressed sales at a record low 16.2 percent.

There were a mere nine foreclosure sales valleywide during January, or 4.4 percent of total activity, while the 22 short sales—where the lender accepts a sale price lower than the outstanding loan—made up 11.8 percent of the total.

A year ago January the two categories accounted for 52.1 percent: with REOs at 16.4 percent and short sales at 35.7 percent.

Those numbers represent good news.

So why do some homebuyers react to vanishing distressed sales somewhat wistfully?

Because buyers benefited from the higher inventory and low prices REOs and short sales offered. Now we’re back to reality, or at least the new version of it.

Part of that reality has more buyers avoiding bidding wars, if for no other reason than because prices rose too high too fast, leaving some buyers unable to obtain a loan and unable to compete.

For six consecutive quarters prices rose and affordability statewide declined. Then in fourth quarter 2013, as price gains eased slightly, affordability finally held steady.

The percentage of households that can afford to purchase a median-priced single-family home in California now stands at 32 percent.

Homebuyers need a minimum annual income of $89,240 to qualify for a home of $431,510, the statewide median price at the end of 2013.

Those numbers were higher than a year ago when the index stood at 48 percent, yet it’s always a nugget of good news whenever affordability holds steady or bumps higher.

Nancy Starczyk 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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