Valley Home Sales on Hottest Pace of Decade
In yet another signal of the San Fernando Valley’s resurging economy, single-family home sales so far this year have outstripped every January-May period this decade, according to figures released Monday.
Fueled by affordable interest rates, sustained consumer confidence and an influx of new residents, a total of 5,243 single-family homes closed escrow between January and May, up 26% from the same period in 1997.
And with the number of escrows pending in May up nearly 30% over a year earlier--a key indicator of future sales activity--June promises to continue the trend.
If the growth pattern holds this month, 1998 would post the best midyear report since 1989, considered by some a high-water mark for Southland real estate.
“ ‘Eighty-nine was probably the best year for local real estate,” said Jim Link, executive vice president of the Southland Regional Assn. of Realtors, which released the figures. “Here in ’98 they’re busting loose again.”
Valley home sales have been on the rise steadily since May 1997, with 1,000 or more single-family homes changing hands nearly every month since then--a dramatic change from the early 1990s when the monthly average hovered around 700 single-family homes.
This year, though, increased sales have coupled with rising prices to create a new crop of winners and losers.
For January through May of this year, the median price for a single-family home sold in the Valley was slightly less than $180,000, a 12% hike from the first five months of 1997, association figures show. The figure for May was $188,000, just 3.4% behind the countywide median for May, and higher than any other month in the Valley since December 1993.
In the Santa Clarita Valley, where escrows closing in May were up 38% compared with May 1997, the median price for a single-family home sold in May was $194,000, a nearly 11% increase from a year earlier.
“For the first time since 1990, the trend is up, and the upper end of the market is very strong,” Link said.
Condo prices are also on the rise in the San Fernando Valley, with May posting a median figure of $110,000, the best showing since January 1996.
Benefiting first and foremost from the real estate uptick are sellers, who often find their homes snapped up quickly at or above the asking price, agents said.
“If your property is listed right, it will sell right away, within three days,” said Bassem Fattah, an agent with Fred Sands’ Sherman Oaks office. “The market is really good right now.”
Agents also said they have seen an influx into the market of “upside-downers”--homeowners who kept their properties off the market during the mid-1990s because their home’s value, and the price they could charge, fell substantially short of their mortgage balance.
Such “over-encumbered” sellers might have had to kick in as much as $40,000 to $50,000 in recent years to complete a sale, agents said, but the current figure is more like $5,000 to $10,000.
“People who are selling now who are upside-down will take less of a hit if they sell this year than if they sold last year,” Fattah said. “We’re seeing more of those people coming in the market.”
Paul Strickland with Bradbury Realtors said he’s also seeing at least a 20% drop in foreclosures, as fewer homeowners are forced to walk away from undervalued properties.
Nima Nattagh, an economist with the real estate research firm Experian RES in Anaheim, said his figures show foreclosures countywide dropping 17%. “The Valley would pretty much be in line with the county,” Nattagh said.
But the surging market is more of a mixed bag for the first-time home buyer, agents and experts said. As prices rise, they are having to reassess their options.
“They’re having to look in areas like Van Nuys and North Hollywood, whereas before they could get into Sherman Oaks and Studio City for below $250,000,” Strickland said. “And some are starting to turn to condos again.”
Some would-be buyers are also finding their options limited by what some agents described as a tight supply.
“For the second half of the year, I think we’re going to continue to see almost record numbers [of sales],” Link said. “The one thing that will hold things back is inventory.”
Nancy Star, president of the Santa Clarita Division of the Realtors Assn., said: “Frankly, demand for quality, properly priced homes far exceeds the available inventory. We have dozens of prospective buyers chasing an extremely limited supply of listings.”
Link noted that in June 1995, there were 6,535 single-family homes and 1,761 condos on the market in the Valley. By comparison, there currently are 4,278 homes and 863 condos--a drop of nearly 40%.
Figures from the Realtors association show sales activity is particularly strong in the southeast Valley, including Studio City and Valley Village.
But Link said he sees strength throughout the Valley, and the county.
“Overall, everyone is experiencing this upturn,” he said.
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Housing Activity
This year’s Valley home sales continue to outpace 1997’s. Last month was the best May on record since 1989.
Source: Southland Regional Assn. of Realtors
