SCV Home Sales Increase for Fifth Consecutive Month

Special to Real Estate
By Mary Funk, President, and David Walker,
Southland Regional Association of Realtors
August 2008 Daily News

The residential real estate market in the Santa Clarita Valley continued to stabilize and show improvement during June with sales of singlefamily homes and condos posting the fifth consecutive month of increased activity, the Southland Regional Association of Realtors reported recently.

Sales of existing single-family homes increased 11.2 percent compared to 12 months ago with Realtors closing escrow on 299 transactions. The total also was 4.1 percent higher than this May. Likewise, condo sales of 75 units were 5.6 percent ahead of a year ago and equal to the May tally.

“Open houses are packed with a lot of people expressing interest in buying a home, but closing a sale remains difficult,” said Doreen Chastain-Shine, president of the Association’s Santa Clarita Valley Division. “Qualifying for a home loan is the primary problem, plus there is a mismatch between buyer expectations regarding prices and the reality on the ground.”

While the single-family median price fell 25.6 percent from a year ago to $450,000 – a drop of $155,000 – and has been drifting downward since April 2006 when the record high of $643,000 was set, the pressure on home sellers to reduce prices is not nearly as strong as buyers presume.

Condo prices also have been falling with the median off 23.0 percent from a year ago to $285,000. The condo record-high median price of $397,000 was set in January 2006. Buyers who read media reports of rising foreclosures assume that every market is flooded with bank-owned properties or homes that are being sold for less than the outstanding balance on an existing loan, known as a short sale.

“Real estate is extremely local with the Santa Clarita Valley far better off than other, harder hit areas of the state, especially those that had large numbers of new home tracts aimed primarily at first-time home buyers,” said Jim Link, the Association’s chief executive officer. “We’re optimistic that the worst has passed and that the Santa Clarita Valley resale market will show further improvement over the coming months as distressed properties are worked out and sold.”

Part of the reason real estate leaders believe further steep price discounts are unlikely is because the number of homes on the market tips the negotiating advantage only slightly in favor of home buyers.

“No doubt that foreclosures and short sales are up and there are still current home owners at risk of losing the property,” Chastain-Shine said. “But the pressure on prices is not nearly as great as buyers assume simply because there are not nearly enough active listings to force sellers or banks to accept steep discounts.”

There were 1,940 active listings at the end of June, down 16.4 percent from a year ago and less than 1 percent below the May tally. At the current pace of sales, the inventory represents a 6.4-month supply, only slightly on the high side of the 5- to 6-month supply that is deemed to represent a balanced market.

Neither Link nor Chastain-Shine expected prices to continued dropping as steeply as in recent months, although prices will stabilize only when some measure of normalcy returns to the financial markets. There were a total of 370 open escrows at the end of June, an increase of 26.7 percent from a year ago and 9.1 percent higher than this May – suggesting that buyers are growing more confident and that resale activity will continue to rise throughout the Santa Clarita Valley during the coming months.