For those of you who live in San Fernando and want to know what the coming year will bring in terms of real estate – the answer is: similar to the last. And similar to the rest of the nation.
California has been going through a housing crisis this last year and San Fernando is no different. Demand for housing is huge. Supply is too meagre to satisfy it.
Two months ago, reports from a university research center and a trade association both showed that San Fernando showed magnanimous growth. Demand was high as always, buyers found houses that matched their need, and brokers and agents were kept busy. This last month differed with the supply of affordable homes lagging below requirements. Critics say that the situation reflects an ominous housing bubble that may well be worse than that the befell the state in 2006, but other experts explain the situation as a common phenomena where supply simply falls short of demand. Some months are better than others. And 2016 will have the same up-and-down fluctuations.
San Fernando’s housing market in the last quarter of 2015
As we wind towards the end of the year (2015), two realty reports categorically stated that San Fernando Valley’s housing market eased into slow season this last quarter with both sales and prices making modest gains. They also showed that similar to the rest of the California housing market, scant inventory continues to restrain buying activity.
1. Report from university research center: San Fernando Valley Economic Research Center at Cal State Northridge.
According to the San Fernando Valley Economic Research Center at Cal State Northridge, sales of new and previously owned houses and condominiums rose 7 percent from a year ago to 1,480 properties. Sales had been up since February with a beautiful spike in July but then slowed. For various reasons, Fall generally sees slow sales. November and December, always slow due to its being the hectic holiday seasons, were slow now, too.
On the flip side, prices softened over the last three months although they are still higher than a year ago. According to economist William W. Roberts, the Center’s director, “these are the smallest year-over-year (percentage) increases we’ve seen in a long time.” Roberts anticipates modest annual price gains to continue well into 2016.
The research center tracks the market from Glendale through Calabasas.
2. Report from the Van Nuys-based Southland Regional Association of Realtors
The Van Nuys-based Southland Regional Association of Realtors, which tracks a market footprint from Toluca Lake through Calabasas, showed sales of previously owned houses in October had increased 6 percent from a year earlier to 523 properties while falling 10 percent from September.
The median house price rose 8 percent from October 2014 to $562,000 and gained $7,000 from September. The median house price, the Van Nuys report said, is now 14 percent under the record of $655,000, which hit in June 2007 before the Great Recession throttled the market. It is also 66 percent above the post-recession low of $339,000 in December 2011.
Prices have been rising for months, and buyers showed that they were aware of that by spiking sales in condominiums rather than houses. Condominiums is a market in which selling prices are nearly $200,000 under those of homes.
Last month (November, 2015), sales of condominiums soared 37.5 percent from a year earlier to 209 units. The median unit price reflected the strong demand, rising 16 percent from a year earlier to $369,000 and increasing $23,000 from September, the Van Nuys association said.
The inventory continued to shrink in October falling 10 percent from the year-ago level. At the end of the year’s 10th month, there were 1,659 properties listed for sale versus 1,847 a year earlier.
However, they also noted open escrows in November that indicated future sales activity. These were up 42 percent from 2014 which – the association said – suggests that activity will continue to be stronger than expected as 2015 draws to its close.
Analysis of the 2015 real estate environment in San Fernando, CA
The housing situation in San Fernando reflects the housing situation in California as a whole. Demand is huge, supply limited, prices tremendous. Some months see better sales than others but the aggravating trend of supply continuing to fail to meet demand causes experts to predict a housing bubble that will equal if not exceed that of 2016. Other experts, on the other hand, negate this prediction insisting that the definition of the term ‘housing bubble’ is incorrect. A housing bubble, they say, is caused by inflation. California, in general, and San Fernando, in this case, experiences the same amount of inflation common to the nation as a while. Basic economics drives high prices due to low supply and high demand. Increase supply and prices will drop with demand being met.
San Fernando has seen some price mitigation during its first and second quarters which was predictably accompanied by a lifting marketing. Some seasons are slower than others. 2016, commercial private investors say, will see more of the same.