Monday, April 28, 2008

Home Sales Post Upward Trend

Southland Regional Assocation of Realtors
Homes are selling in the San Fernando Valley with activity gradually picking up on a month-to-month basis and the number of properties in escrow suggesting the trend will continue through the coming months.
A total of 416 single-family homes changes owners during March, up 16.2 percent from February. While sales were down 46.0 percent from a year ago, activity has been trending up since October with March being the third consecutive month of increased resale activity.
"If this trend continues," said Mary Funk, president of the Association, 'it suggests we may have passed the bottom of this cycle with the worst behind us."

Pending escrows, a measure of future activity, supported the perspective: down from a year ago, but up from month-to-month. There were a total of 853 transactions in escrow at the end of March, a mere 4.6 percent lower than a year ago, yet up 12.4 percent from February tally.

The Association also reported 151 condominium sales during March. That was down 53.4 percent from March 2007, but up 42 transactions or 38.5 percent from February. March also marked the third consecutive month of increased condo resale activity.

"After flatlining late last year, the patient most assuredly is showing a pulse," said Jim Link, the Association's chief executive officer. "We're witnessing a slow, steady increase in activity that seems likely to continue to gain momentum."

Link and Funk agreed that any increase in sales is likely to come at a slower pace than might be expected because of the presence of foreclosures, which take longer to close escrow than a traditional home sale.

Bank owned properties may present an opportunity for buyers - although price declines are not nearly as steep as some buyers expect - but Link and Funk said buyers who focus solely on foreclosures may well be missing other opportunities.

Negotiating with a motivated seller, whose home is priced competitively from the beginning, may yield a superior bargain and a faster, smoother escrow than a foreclosure," Link said. "Plus, the condition of the home in a traditional purchase often is better than a foreclosures, which typically are sold 'as-is,' offering zero opportunity to negotiate for repairs or concessions in price."

"It will take some time for foreclosures to work their way through the system and only then will prices stabilize," funk said. "However, with each sale, the negative impact of foreclosures on prices will decrease."

While the inventory of homes is dramatically higher than the less than one-month-supply common during the boom market, it is nowhere near the record levels set during the national recession of the early 1990s.

A total of 7,193 properties were listed for sale throughout the San Fernando Valley at the end of March. That was up 26.6 percent from a year ago and 1.5 percent higher than February.

At the current pace of sales, the inventory represents a 12.7-month supply - clearly a buyers' market, but well below the 20 plus-month supply seen during the early 90s.

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