Housing Slowdown?

Based on his four decades of selling homes in the San Fernando Valley, Jerry Gooze believes that the Valley market is ripe for a transition. “People can’t afford it in combination with higher interest rates,” the residential real estate agent told the Business Journal. “Prices will go down.” According to twin reports released Oct. 29 from Southland Regional Association of Realtors, the inventory of homes for sale in the San Fernando Valley in September, while still relatively tight, saw its highest volume in two years. Realtors brokered the acquisitions of 422 single-family homes and 126 condominiums for the month; those numbers that have dropped 22.1 percent and 35.4 percent, respectively, from the year before. “Entering 2018, there were signs of softening,” said Gooze, an agent at Pinnacle Estate Properties Inc. in Northridge. “There was a smaller buying pool for higher-priced houses.” Especially among first-time homeowners. Gooze believes the new tax laws, only allowing a $10,000 deductible, have discouraged purchasing houses, while among seasoned home-buyers, a pattern began emerging. “People are going out of state (to buy properties) to avoid taxes,” Gooze said. Rising inventory The realtor’s association’s statistics align with Gooze’s observations that while sellers of Valley homes and condos may still have market advantage, sales are taking longer because of an increase in inventory, higher interest rates, and buyers’ difficulties in affording houses and condos at current prices. The median price of homes and condominiums, while still rising, came in 1.5 percent and 2.4 percent, respectively, higher than a year ago. The association reported a median price of $670,000 for homes and $430,000 for condominiums. Both figures were below their respective record highs set earlier in 2018 of $708,000 and $449,000. “It truly is a market in transition,” association President Gary Washburn said in a statement. Overall, the association reported 1,608 home and condominium active listings, up 16.9 percent from a year ago and translating to a second consecutive monthly increase for the market. The numbers also represented the highest number of active listings for any month since September 2016, “though still well below the historical average that would indicate a balanced market,” Washburn noted. In a separate Santa Clarita Valley study, the association reported the inventory of homes and condominiums reached their highest peaks since September 2014. Sales in both categories in Santa Clarita plummeted in September, even as inventory increased to its highest level since August 2014. “What we reported last month remained true throughout September — the market is changing,” said M. Dean Vincent, chairman of the Santa Clarita Valley Division of the Southland Regional Association of Realtors, in a statement. “An increase in the number of active listings combined with prices that fewer and fewer buyers can afford, give the remaining buyers more bargaining tools.” That said, Vincent added: “We’re still a long way from a buyers’ market, but anything that eases upward pressure on prices is welcome.” Santa Clarita could be moving toward a buyers’ market as house values come down. In September, the median price of single-family homes equaled $599,900. According to the association’s statistics, that’s a rise of 2.5 percent from a year ago yet 6.7 percent below April 2006’s record high of $643,000. “Slowing down price appreciation and a rising inventory sound like good news,” said association Chief Executive Tim Johnson in a statement. “While there is a measure of uncertainty hanging over the market’s long-term prospects, there are no major storm clouds on the horizon today and over the next three to six months, there appear to be more opportunities than potential pitfalls for buyers and sellers alike.” Dire Ventura forecast The worst news in residential continues to unfold in Ventura County, where housing prices are limiting growth and driving families out. When California Lutheran University Center for Economic Research and Forecasting, led by Executive Director Matthew Fienup, released its 2018 Ventura County Economic Forecast on Nov. 8, highlights of the study appeared less than sanguine. The dominant economic narrative in Ventura County marked a continued decline in economic activity. “We hesitate to the use the word recession, but we don’t know what else to call two consecutive years of economic contraction,” said the report. And in the long term, the report pointed to housing as a stumbling block for economic expansion. “The dominant factor influencing housing affordability is supply,” Fienup’s report said. “We simply don’t build enough. Without substantial improvements in housing affordability, Ventura County’s future is an economy of haves and have nots, of wealthy residents and a large commuter population that enters the county each day to work in low-wage jobs.”