Local Housing Market Needs Listings

The local housing market continues to steam forward.

As reported by the National Association of Realtors®, the Pending Home Sales Index posted its 8th consecutive monthly gain in September.

It’s the longest winning streak in the history of the index and Pending Home Sales are now at their highest levels since December 2006. A Pending Home Sale is a home under contract to sell, but not yet closed. It’s the precursor to an Existing Home Sale.

Trade group data shows that nearly 80 percent of “pending” homes close within 2 months. The majority of those remaining close within months 3 and 4.

When the Pending Home Sales Index rises, it tells us that market activity has picked up. September’s data confirms what we’ve been noticing since February — the Buyers Market is ending.

With more homes under contract in the marketplace, homebuyers typically face one or more of the following:

1. Competitive, multiple-offer situations
2. Reduced purchase price leverage over sellers
3. Fewer seller concessions

Therefore, if you’re buying a home in the next several months, know that the 8-month run in Pending Sales will lead to a run in closed sales. The extension of the home buyer tax credit will tend to keep healthy activity in the housing market, boosted by expanded eligibility to existing home owners. All in all, we should see a result in stabilized if not higher home prices, over time.

Indeed, we’re already beginning to see it with multiple offers and price overbidding in some cases, although lags in appraiser values are tending to moderate prices after the bubble's irrational exuberance in home prices.

Right now, the Santa Clarita area active listings number is at near historic lows. Low inventory, especially in the under $500,000 price range, combined with still-low interest rates has resulted in too many potential buyers chasing too few available homes. Over time, if these conditions continue, prices will rise. However, many in the housing industry think that banks are still overwhelmed with foreclosed inventory that is being held off the market and will be offered for sale starting within the next few months. The so-called 'shadow inventory', as it is released, will tend to keep home prices at or near current levels.

So I would not count on any imminent large rise in home prices just yet. But it is a volatile and fragile market. Please give us a call to find out how you can best position yourself for continued changes in the housing market at 661-290-3750.