San Fernando Valley Sales Down 35%, While Prices Post a Modest Increase

[from the Southland Regional Association of Realtors]

Home sales in the San Fernando Valley during 2007 declined a record 34.9 percent from the prior year, while the annual median price posted its smallest increase in many years, the Southland Regional Association of Realtors reported.

A total of 6,271 homes closed escrow compared to the 9,632 sales of 2006. The peak of the recent boom came in 2003 when Realtors completed 13,878 sales, but the record high was set in 1988 with 15,263 single-family transactions. Annual home sales in the San Fernando Valley have been slowing since 2004.

Realtors managed and negotiated home and condominium sales during 2007 that generated $1.76 billion for buyers, sellers and the local economy. That figure does not include the added millions of dollars home sales yield for related services, such as contractors, landscaping specialists, home improvement companies and manufacturers of furniture and appliances.

"Sales are down and prices are soft, but people have to be shaken out of their attitude that prices will plunge dramatically," said Mary Funk, the 2008 president of the Southland Regional Association of Realtors. "I just do not think resale prices will go down nearly as much as some people believe. There is no bell that goes off when the market hits the top or the bottom of a cycle, so anyone who needs a home and is waiting to catch a steal may be disappointed and may miss an opportunity."

Some of the properties listed for sale on the Multiple Listing Service operated by the Association are foreclosures owned by banks and short sales, Funk said, but the San Fernando Valley does not have nearly as many distressed properties as regions of Southern California that were hit harder by the sub-prime mortgage meltdown. Typically, the areas reporting the most problems had extensive new home construction and a high percentage of first-time buyers, unlike the San Fernando Valley which is a mature housing market with limited new home and entry-level sales.

"Sellers are finally accepting the new reality and those who are selling today are doing whatever it takes to complete a transaction," said Jim Link, the Association's Chief Executive Officer. "However, there are too many prospective buyers who think prices should be much, much lower, and think they can snag a super bargain. "But banks are not going to dramatically slash prices and take a huge loss," Link said. "Banks want to recoup their investment and that means they will list properties competitively at prices below comparable homes, but certainly not at fire sale prices."

Condominium resale activity throughout the San Fernando Valley during 2007 fell for the fifth consecutive year, down 33.2 percent drop to 2,443 condo sales. However, annual condo sales have been lower - below 2,000 transactions from 1993 to 1995, including the record low of 1,607 set in 1993. The record high of 5,041 transactions was set in 2002.

The annual single-family median price came in at $61 1,933 -the highest on record. The increase of 1.0 percent was the lowest gain on record with each year posting slightly smaller gains since the 26.3 percent increase of 2003. This year's annual median price beat the prior record of $605,917 set in 2006.

The annual condominium median price of $385,967 was down 2.3 percent from 2006 when the record high $394,917 annual condo median was posted. It was the first drop in the annual median since 1996. From 2000 to 2005 the annual condo median posted double-digit increases with the largest one of 28.7 percent coming in 2003.

"It's difficult to predict when this cycle will end and working out the limited number of local foreclosures may take some time," Link said. "Hopefully, by Spring we will see a market that is a little more predictable than today."

There were 5,671 active listings throughout the San Fernando Valley at the end of December, an increase of 8.8 percent over a year ago. At the current pace of sales, the inventory represents a 10.9-month supply - a buyers' market, but a clear improvement from recent months when it went as high as a 16-month supply. For perspective, the record high was a 23-month supply set in February 1993. A balanced market is in the 5- to 6-month range.

December single-family sales plunged 51.6 percent compared to the prior year while condo sales were off 55.6 percent. Declines in the median price of homes and condos were 12.4 percent for homes and 16.5 percent for condos. Prices are still sticky, not dropping nearly as fast as sales would indicate they should.