The number of homes sold in Los Angeles County climbed significantly as lower interest rates and a new tax credit prompted waiting buyers to pounce.
Sales were up an adjusted 19 percent in March from the previous month. Median home prices fell only 1 percent to $306,000, according to figures from HomeData Corp. in Hicksville, N.Y. (The Business Journal adjusts the percentage change in sales volume to reflect differences in the number of monthly selling days as compiled by HomeData.)
Year-to-year comparisons were more dramatic. Volume was up 41 percent versus the same month a year ago; the median price was down 34 percent from $465,000 in March 2008.
Condominium sales increased 34 percent month over month and a whopping 86 percent from a year ago. The median price increased 3 percent to $297,000 in March, a drop of 28 percent from last year’s $411,000.
The high volume of sales was driven by low interest rates and first-time homebuyers coming into the market for an $8,000 federal tax credit.
“In late February, it got to be where our buyers who had been putting it on hold just all of a sudden were back in search mode and very motivated,” said Natalie Cerpa, a real estate agent with Dickson Podley Realtors in La Canada-Flintridge.
In February, Congress gave first-time homebuyers an $8,000 tax credit if they buy before Dec. 1. The tax credit’s terms are less restrictive than last year’s $7,500 incentive: The credit is available under most financing arrangements, making it easier to get for lower-income house hunters. Also, the credit doesn’t have to be repaid, unlike last year’s.
Then in March, interest rates fell sharply 22 basis points to 6.7 percent for a 30-year fixed mortgage, according to Bankrate.com after the Federal Reserve announced plans to buy $750 billion in mortgage-backed securities, in addition to the $500 billion it previously committed to purchasing.
Cerpa said she has seen more foreclosures in some areas Pasadena, Glendale and Sunland-Tujunga than in others. Resulting low prices are getting buyers who were looking in the $300,000-$400,000 range off the fence.
“There are so many buyers, and the competition is high,” she said. “You can finally get a decent house that you couldn’t afford before.”
The Consumer Confidence Index was up 2.8 percent in March, according to the Conference Board.
J.D. Songstad, a broker with Remax Westside Properties, said his clients, who include both first-time buyers looking for condos and those looking at multimillion-dollar properties, are being choosy given the lower prices and higher inventories. And those who can afford it are starting to consider trading up.
“They might sell their property at a loss or for little profit, but they’ll maximize what they’re getting when they move up,” Songstad said.
Cerpa said buyers in her area, which includes Glendale, Burbank, Eagle Rock and surrounding cities, are showing preferences for now-affordable homes over condos.
Songstad said he has seen an increase in condo sales on the Westside as more desirable properties become available.
He also thinks prices will continue to fall through the end of the year. Whether that will mean more people lining up to buy will depend on other effects of the economy.
“Who knows what the news will be tomorrow and how the job market will play out,” Songstad said. “It also depends on how things happen on the loan side that’s going to be tight even if you’re well qualified.”
