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Monday, October 02, 2006

Santa Clarita Valley Resale Home Prices Rise 6%

Resale prices of single-family homes sold during August in the Santa Clarita Valley showed solid gains even as the inventory grew and sales remained solid but fell by a third from the unsustainable levels of last year, the Southland Regional Association of Realtors reported.

A total of 250 single-family homes changed owners last month, down 29.4 percent from a year ago, but up 5.5 percent from the 237 sales of this July. The month-to-month increase reflects typical seasonal patterns while also bolstering arguments that the current market represents a more normal, balanced environment than the hyperactivity of the last four years that favored only sellers.

Sales of 106 condominiums during Auguest were 32.9 percent lower than a year ago and off by 13.1 percent from this July. A larger inventory of single-family homes offers buyers more choices than at any time in the last four years. Families once limited to only condominiums now have an opportunity to buy a single-family home.

Active listings increased to the highest figure on record during August - up 207.1 percent from August 2005 to a total of 2,598 active listings. But the record gain in inventory comes after months of record lows which means the inventory offers a wider selection, but is still not large enough to turn the market in favor of buyers.

At the current pace of sales, the 2,598 active listings posted at the end of August represented a 7.3-month inventory - just outside the 5- to 6-month range regarded by real estate experts as one indicator of a balanced market where neither buyers nor sellers hold undue negotiation advantage.

Some sellers cling to unrealistic price expectations and some buyers incorrectly think they can make incredibly low, equally unrealistic offers simply because sales are down from record-high, unrealistic levels. Buyers and sellers who understand the new realities realize that this is the kind of balanced market that will allow buyers who want to stay in the region to upgrade to a nicer house.

Yet some buyers and sellers are frozen in place by the turn in the market and fail to realize that in almost all instances home purchased five, ten, 15 or 20 years ago continue to show incredible price gains. Investors looking for a quick return dislike the uncertainties of today's market. But anyone intending to live in a house for at least five to seven years most likely will realize at least a modest increase in the resale value of their home.

Unlike the early 1990's, the outlook for the Southern California's diversidfied economy remains bright, even as the red-hot housing market cools off and the effects ripple throughout the region. Ther still are not enough homes available to satisfy demand which insulates the market from any dramatic plunge in resale prices.

The median price of the 250 single family homes that changed owners in the Santa Clarita Valley during August was $615,000, up 6.0 percent from a year ago. That is still a considerable price gain, albeit well below the 20 percent and 25 percent hikes that were common over the last four years. The record high of $643,000 was set in April of this year.

For the first time in five years, the condominium median price fell compared to the prior year. The August 2006 condominium median resale price of $370,000 was down 2.4 percent from August 2005 when it was $379,000. It also fell on a month-to-month basis by 1.3 percent. The condominium record high of $397,000 was set in January.

It does not surprise me to see prices vary over a wide range from month-to-month. I think price swings will be common until buyers and sellers get used to the new realities of a calmer, moderate, evenly paced residential housing resale market where neither buyer nor seller have the upper hand.


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