In my continuing effort to educate and inform consumers and prospective buyers here in Los Angeles & Ventura counties about our local market, I want to continue with the next series in my local reports: the San Fernando Valley.
The San Fernando Valley is a rather large area that encompasses numerous cities so in an effort to break it down to a more manageable area, I am going to divide it into smaller sections started with the: West San Fernando Valley.
The West Valley is an area that encompasses several cities (Calabasas, Canoga Park, Chatsworth, Hidden Hills, West Hills, Winnetka & Woodland Hills). It's located in the north western part of Los Angeles county, just south of the Santa Clarita Valley and just east of the Ventura county line.
Using the same price range $417k< as I did in previous local reports, when working with prospective buyers in the West Valley, the homes in this price range are mostly modest three and four bedroom homes (with a small percentage of both smaller and larger homes) averaging more than 1,500 sq. ft. in size.
In reviewing the sales for the past 90 days because this is the timeframe that lenders and their appraisers often look at when determining property values, the average sales price for this price range is 329k. Last year, the average sales price for this area and price range was 346k and in July of this year, it was $335k.
With an approx. 5% decrease in prices since last year and less than a 2% decrease from just a few months ago, it would appear that the decline of the West Valley has slowed. While this is still considered a declining market, it’s definitely not massive drops that the media has been spewing about.
The absorption rate is the number of months it would take to sell the properties that are currently listed on the market. The current rate of absorption for this area is 1.92, which means based on the average amount of sales per month; there is less than two months of inventory on the market. The absorption rate for this area has been relatively the same for the past year now.
A stable market would be an inventory of about six months or an absorption rate of six. However, the competition between buyers for many of the eligible properties in this area remains fierce and this scenario generates bidding wars and actually drives prices up, which is not a sign of a buyer’s market.
For much of the past 12mon, the absorption rate has remained low, with a slight decrease during the summer months which is rather typical. This is very popular area in the San Fernando Valley and one where the demand is far higher than the supply.
Here in the West Valley, properties are selling pretty close to list price and the avg. sales price vs. list price is 97%, which has remained unchanged all year. While the average SP% vs. LP% for traditional financed properties (99%) is higher than the SP% vs. LP% for cash sales (94%); even the cash sales are not what one would call "lowball" sales. The lowest cash sale was 70% of the list price and was priced accordingly to its condition (it was a run-down REO in a nice neighborhood).
Approx. 42% of the sales were at list price or higher, here in the West Valley, which has remained pretty much the same all year. For buyers looking to purchase a nice looking property in the low-end of the market here, chances of you having to make a full price or higher are highly likely, unless, of course, you have a boatload of cash.
The practice of many listing agents intentionally list property slightly below market value simply for the purpose of generating bidding wars in order to get higher than list offers is very prominent here in the West Valley. Based on this practice the average SP% vs. LP% for those offers at list or higher is 101%. As you can see, the West Valley is definitely not a lowball buyers’ market.
When it comes to buying a property in the West Valley, cash is not really king around here anymore. Based on recent sales for the past 90 days, traditional financed sales are the majority types of sales and cash sales have actually been decreasing for the past six months. This may be attributed to an increase in investor flipping sales. Another disturbing stat is the lack of any CalVet/VA sales; a drop of 3% since July.
Overall, sales for the West Valley have increased more than 20% from last year. Unfortunately though, like so much of Los Angeles & Ventura counties, the market here in the West Valley is still saturated in short sales and REO's even though they have been slowly declining all year. However, equity sales are up 5% from last year and much of this can be attributed to investor flips.
Lastly, so far this year, the avg. DOM in the West Valley has increased to 114 days from 97 last year. Much of this can be attributed to longer escrow times for short sales and some really long probate sales.
In summary, while the West Valley is still a distressed market due to the number of short sales and REO's in the market, we are most certainly not a lowball buyers’ market. Buyers who want to purchase a nice looking, halfway decent property here are not only going to have to compete for it with other buyers but they're also going to have to probably pay close to list price or more for it.
Today's real estate market can be really scary, which is why it's important to get as much information as possible before starting your search. The pre-approval process is not a simple process and it's because it can get really complicated and convoluted, that borrowers today need affordable loan options that are best suited for their own needs.
For more info on affordable home loan options, contact me, Donne Knudsen from C2 Financial Corp. at 805.2069123 or donne4loans@earthlink.net.
Please check out other Local Reports for Los Angeles & Ventura counties
LOCAL MARKET REPORT: Simi Valley (Ventura County)
LOCAL MARKET REPORT: Santa Clarita Valley (Los Angeles County)
LOCAL MARKET REPORT: Conejo Valley
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