Annual Median Price Falls 5.4%
[from the Southland Regional Association of Realtors]
2007 was the third consecutive year that sales of existing single-family homes in the Santa Clarita Valley declined while the annual median price of homes fell for the first time on record, the Southland Regional Association of Realtors reported.
A total of 1,993 single-family homes changed owners last year, down 31.3 percent from the prior year. It was the lowest annual total since the association started keeping statistics in 1998. The record high of 3,869 home sales was set in 2004, the peak of the recent sellers' boom market.
Likewise, the condominium annual tally of 841 condo sales was the lowest on record. It dropped 32.5 percent from the prior year, with three of the last four years posting sales declines after six consecutive years of typically double-digit increases in sales.
Realtors managed and negotiated home sales in the Santa Clarita Valley last year that generated $1 -57 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars each sale yielded for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.
"I truly do not expect resale prices to go down all that much," said Doreen Chastain-Shine, president of the Association's Santa Clarita Valley Division. "Still, sellers don't want to believe what's happening, that the market has shifted in favor of buyers. Sellers are still not being realistic."
Chastain-Shine and Jim Link, the Association's chief executive officer, said that while it will take some time to work out problems related to foreclosures and short sales in the area, the problem is not severe enough to dramatically impact resale prices.
However, the market is at stalemate because sellers cling to boom market expectations and buyers incorrectly believe they can purchase a home at a dramatically reduced price. But even foreclosed properties listed for sale by lenders are not being priced with large discounts as lenders want to recoup their investment.
"While we're seeing the effect of the subprime crisis in the overall market," Link said, "we are not in a price free fall like what might be happening in market with large amounts of new home construction and a high percentage of first-time home buyers."
The statistics for 2007 support that view: The annual median price of the 1,993 homes sold last year was $570,658, down 5.4 percent from the record high of $603,492 set in 2006. It was the first drop in the annual median since the association began keeping statistics in 1998.
The condominium annual median price of $353,333 was down 7.2 percent from the record high of $380,583 set in 2006. Just like single-family homes, the condo annual median posted the first decline on record. From 2001 to 2005 the condo annual median price posted double-digit gains with 2003 and 2004 at 28.3 percent and 28.7 percent respectively.
There were 2,100 active listings throughout the Santa Clarita Valley at the end of December, up 9.4 percent from a year ago, but down 10.3 percent from the November tally. At the current pace of sales, the inventory represents a 12.7-month supply - clearly a buyers' market, but not as large as the 15.7-month supply reported in November.
"The mind set that real estate values never go down simply is not true," Link said. "Like any commodity, real estate has it's peaks and valleys, but over time owning a home in California has always been a solid investment that continues to increase in value."
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4 comments:
"I truly do not expect resale prices to go down all that much," said Doreen Chastain-Shine, president of the Association's Santa Clarita Valley Division.
But isn't this coming from the same folks who said there was no housing bubble (that all economists now admit exists) and who think a bottom will be put in sometime in the spring (which is already here)? I dunno, I remember the ride down from 1990-1995 and 1989 was nothing near as frothy as 2006.
Garrett, you make a great observation! I regularly post comments by our local and national Realtor leadership because this is a real estate blog and my readers expect to hear from all of the legitimate sources.
If you read my regular commentary and analysis of the market, you know that I'm no fan of these industry mouthpieces as reliable sources of information. Their laughable denial of a housing bubble for so long pretty much skewers their credibility. However, there will be a bottom in the market eventually, and eventually they will be right.
Garrett, there are a lot of my co-licensees who believe that if they just stop 'talking down' the market that the good times will roll again. Of course many of these people also believed the so-called 'laws' contained in 'The Secret', and have been a bit detached from reality for a while.
Right now foreclosures and short-sale work-outs continue to suck the bottom out of the market as these ever lower-priced comparable sales deflate what you correctly call the recent housing bubble. That's the reality. Any reliance on the local or indeed National Association of Realtors' 'happy talk' about market conditions would be foolish, given their recent way off-the-mark pronouncements.
Well, I bought in during the last downturn (1993) and sold out near the high. I'll be back in a Christmas or two. I'll be reading your blog. Thanks.
Market timing is a dicey thing, but apparently you have had past success. In our market area there are deals to be made now at prices 25% of the market top. It is not yet a broad trend since many sellers refuse to surrender at that low price level, but there are some distressed properties due to foreclosure, location, or condition that are great values for the buyer now. If you are in our local Southern California market, send me an email.
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