85.7 F
San Fernando
Monday, May 29, 2023

Valley Housing Market in Slow Recovery Mode

Valley area residential real estate brokers are cautiously breathing a sigh of relief this year as home values continue to rise and the number of people looking to buy steadily increased into the first nine months of 2012. Most brokers hope they’re putting the difficulties of the last few years behind them. While many local real estate brokerage firms still saw a slight dip both in sales volume and number of units sold from 2010 to 2011, they say numbers are on the rebound and slated to improve for 2012. “We have definitely seen an uptick, both in units and in sales,” said Kathy King, who manages Prudential California Realty’s Encino office. “I think this is going to be the year that we really turned the corner. Now we’re starting to see multiple offers for homes.” According to the July 2012 San Fernando Valley Housing Report from the San Fernando Valley Economic Research Center at Cal State Northridge, foreclosures plunged 45.3 percent since last year. At the same time, median prices have slowly begun to recover, with the median home price in the Valley coming in at $400,000, up 6.7 percent over July 2011. “In some communities, you’re going to see 5 to 10 percent growth by the end of the year,” King said. Some areas have been seeing that upswing for quite some time. The Antelope Valley demonstrated quite a bit of growth in 2011. RE/MAX All-Pro in Lancaster saw home prices rise, enabling the firm to sell 300 fewer units and still see their sales increase by just over $70 million. But owner Peter Terracciano says that the increase still isn’t where it should be. “They’re rising, yes, but I wouldn’t say that they are anywhere near what they should be,” said Terracciano. “Affordability has never been so high. The analogy I use is that if they were to give you the land for free, you couldn’t build the house for less than you can buy one now.” The biggest hurdle for local agents has been the lack of inventory, say brokers across the region. “Clients can find what they like, but there becomes a bidding war,” said Steve Katz, branch manager at Coldwell Banker in Studio City. With prices rising though, the inventory should increase as sellers see more equity in their homes. And in Studio City, Katz doesn’t foresee much of a problem in selling those homes, noting “desirable areas will always be desirable.” King echoed his comments, saying that the lack of inventory is still holding local brokers back from closing more sales. “If our inventory increased 25 percent, our sales would increase by 25 percent,” she said. “We are really seeing just a lack of inventory to sell to our clients.” Terracciano said that despite his firm’s impressive gains, the lack of available homes has stymied even larger gains. “Historically, in my 30 years of experience, we would have a six- to nine-month inventory in an economy like this,” he said. “But right now, we have less than 30 days of unsold inventory. It’s frustrating everybody.” He noted that agents in his office are working “extraordinary” hours, sometimes seven days in a week, in order to be able to find homeowners willing to sell. In addition to low inventory and a slow-moving price increase, brokers now are dealing with new appraisal regulations which are creating a new environment for sales. Since the passage of the Dodd-Frank regulations in 2010, brokers say that the appraisal process has been arduous, and the results, disappointing. “The appraisers are still bringing in appraisals low even though there are multiple buyers,” Terracciano said. “The concept of market value is no longer germane. The idea used to be a willing buyer and a willing seller.” Terracciano also noted that as banks are still unwilling to foreclose on many owners in default, it’s creating a false sense of where the market correction really stands. “I don’t think recovery will really happen until these large banking agencies are able to free up some of the homes that are in default,” he said. The Economic Research Center report indicated that Notice of Defaults in the San Fernando Valley are up 28.8 percent over July 2011, even though the general trend since 2010 is one of declining NODs, even as foreclosures dropped dramatically. But despite the uphill climb, Valley-area brokerage firms are determined that 2012 will be the year they are able to put the last few years’ difficulties behind them. “Houses are selling quicker and at higher prices,” Katz said. “Volume starts first, then the inventory. When sellers see they have more equity, then they’ll be willing to put their houses on the market.” Once those houses are on the market, they shouldn’t have much problem selling, brokers say.

Featured Articles

Related Articles