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Home sales drop

Realtors say inventory is low and lending is slow

Posted: July 23, 2009 10:32 p.m.
Updated: July 24, 2009 4:55 a.m.
A low housing inventory and slow lender processing are to blame for a nearly 12-percent drop in home sales during June throughout Santa Clarita Valley, according to the Southland Regional Association of Realtors on Thursday.

A total of 202 homes closed escrow in June, which was up about 3 percent from May but down 11.8 percent compared to a year ago, according to the association's Thursday report.

For the second month, home sales dropped in June compared to levels from a year ago.

The two-month drop in May and June comes after a 13-month rise in sales.

The median price of the homes sold in June was $410,000 - a $10,000 jump from May's median price but down almost 9 percent from June 2008 numbers.

"Buyers are out there, but there simply are not enough properties listed for sale to satisfy demand," said Nancy Starczyk, president of the Association's Santa Clarita division, in the report. "Plus lenders are hesitant to write home loans and continue to be slow in deciding if they will accept offers on short sales."

With 891 active listings on the local market, that number was down more than 51 percent from a year ago.

According to the association's report, those listings represent about a three-month supply at the current pace of sales. A balanced market occurs when the inventory is in the range of a five- to six-month supply, the report said.

"With a diminishing inventory of existing homes for sale and little new construction available, there simply are not enough properties to satisfy today's expanding demand," said Jim Link, CEO of the association. "Prices appear to have hit bottom, but the lack of inventory is a draw on the market's recovery."

Phil Nordella, a Realtor with Realty Executives in Newhall, said inventory is ridiculously low with a mixture of short pays, a few foreclosures and regular sales.

"The issue we're having right now is lots of buyers and nothing to sell them," Nordella said Thursday. "We're seeing if you list something for fair market value and it has anything going for it, we're going to see 10 to 15 offers."

Nordella said part of the explanation for low inventory resides with hesitant sellers.

"Most people with equity ask ‘Why do I want to sell at the bottom?'" he said. "One of the reasons why we're not having a lot of inventory is people are not willing to sell for what their homes are going for now."

But those homes that are being sold are going, on average, for $10,000 to $20,000 above asking price, he said.

Nordella, who is also the manager of the Foreclosure Center in Newhall, said it's hard to say if demand will push prices higher.

Gov. Arnold Schwarzenegger in June extended a moratorium on California home foreclosures to keep borrowers in their homes for another 90 days.

"The feeling of the industry is there's supposed to be about 500 more foreclosures for this next wave in Santa Clarita," he said. "But we've got a backlog of about 4,000 buyers."

If that foreclosure wave hits after the governor's moratorium extension is lifted, those homes "are going to be all snapped up," Nordella said.

Once the market rids itself of the foreclosures, then it might see prices rise again, which Nordella does not anticipate to see until next summer.

Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said while low inventory could be a hurdle, there is evidence that the county's housing market is stabilizing.

The Santa Clarita Valley is one market that remains attractive to prospective buyers.

"We're hearing that in good areas, where there are attractively priced homes and a good quality of life, schools, and public safety ... you're seeing bidding wars break out," he said.

But while there are promising signs of market recovery, Starczyk said, "There is still no true recovery taking (place) yet here in the Santa Clarita Valley."


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