As we hit the midpoint of the year, some of what I suggested in January has indeed come to pass. For the most part, the market is healthy with low-interest rates having helped entry-level buyers enjoy home ownership. Even the high-end has seen some of the highest sales in the history of Santa Clarita. Because buyer confidence is so important to a steady market, the media is helping when they report rising prices, not enough homes for sale, stronger job markets and modest increases in income. Yet, it is assuredly not an across the board, “My home will sell for more than my neighbor’s just did” market. This report will very clearly tell you what is hot and what is not…and how fast it can change.
One of the strongest signs that Real Estate has come all the way back in the last few years is obvious in the non-residential side of the business. Though I rarely report on commercial properties, apartment buildings and shopping centers; that part of real estate has REALLY come roaring back. Because investors look at those properties with a very logical eye, it is all about the return on their money. The emotion which plays such an important part in residential Real Estate really doesn’t exist. So when I tell you that investors are gobbling up properties throughout Southern California with the lowest returns I have ever seen in 25 years of selling homes, it means something. And what it means is that they are betting on future appreciation and they believe with multi-unit properties that rents will continue to rise. So far they have been correct, as rents are up 10% YTD in most areas. Vacancy on retail, office and commercial buildings is also at very low numbers from a few years ago and this whole segment of the Real Estate business is definitely HOT. With residential homes though, it’s a little trickier to explain. For the most part, I would describe this market as strong but erratic. Certain pockets where inventory is low can expect a terrific response from buyers just waiting for something in “that neighborhood” however, in other areas, not so much. Read on for what is, and isn’t…”hot.”
Keeping it simple, it is safe to say that if you have a single family home in Santa Clarita under $475,000 you have plenty of buyer prospects and probably very few homes competing against you. At the end of the day, that’s what defines a “hot” market. Everywhere in Saugus, Newhall, Canyon Country and Castaic is strong in these price points. Every day we see multiple offers in this segment of the market and when I tell fellow agents I have a 3 bedroom Valencia Sunrise coming up the calls begin immediately. That type of property that was maybe $385,000 a year ago can expect offers closer to $450,000 today. The numbers aren’t quite that strong everywhere in Santa Clarita, but the more popular tracts in our valley enjoy the same double-digit appreciation and interest. I don’t see that changing anytime soon. Because prices are rising here, the number one thing to prepare for is the appraisal and how you are going to sell when your home may not appraise for the price a buyer is willing to pay. Smart agents are getting them closed and that is keeping this whole segment “hot”.
With our attached homes, it’s mixed. For townhomes (no one above or below, attached garages, small yards) the market is “hot” under $375,000. Condos, especially older units, don’t enjoy the same interest, but still sell when priced properly. There are 130 attached homes for sale in Santa Clarita and 140 in escrow. That is a sign of a healthy market, but not “hot,” especially if you are one of the 130 sellers vying for buyers.
The $500,000-700,000 price point is trickier and very neighborhood specific. A highly upgraded home in newer Castaic or Saugus with a great yard can sell quickly, but not always. Valencia and Stevenson Ranch? Maybe, but not if the home has high Mello Roos or objections to condition or location. Not everything just sells here, and that is sometimes hard for homeowners to understand. The trend that started one year ago, that homes were taking longer to sell in this price range, continues today. Here buyers and sellers are much more in balance, and if you are considering selling, timing is everything. Here is where my comment about “erratic” comes in. In March, I could list a 2700 square foot home in Saugus for $600,000-675,000 and have maybe 3 or 4 homes to compete against. If it was sharp it might have multiple offers. Today, there are 3 times as many homes for sale and that same home might even sell for a bit less than in March because of the competition. For this reason, if you plan to sell in this range the number one thing to evaluate is how many homes you compete against. In many neighborhoods, sellers out number buyers. That means “not so hot”. You will still sell, just not as quickly as and maybe not for more money than the last one like yours. And if there are 6 or 7 competing homes, you may need to price at or below the last sale to insure offers. This is VERY different from the lower price points. The last tip here is for some reason MANY sellers waited to put their homes on the market until June. I don’t know why. If you are in this price range, realize that buyers that want to move around a school year start in March, sometimes February. Give yourself the competitive advantage of being on the market when the competition is lower and the buyers are stronger. We had a strong March. We expected it to continue into April and May. It didn’t. That is why you see so many homes that have reduced their prices in the last 45 days.
Over $750,000 is truly reflective of a mixed bag. I am happy to report that I was able to sell the highest priced home in the history of Santa Clarita in March, a $4,000,000 Westridge custom. Another record sale happened with an incredible property in Southern Oaks. The larger Woodlands homes are in high demand and all the agents know who has buyers for them. Larger homes in Northbridge & Northpark are in high demand as well. I would describe all of these markets as “hot” for what some call “trophy” properties (the best location, the biggest lot, the nicest upgrades). But what if that doesn’t describe your home? After the 4 million dollar sale, a number of sellers tried prices considerably higher than before it…and none have sold. Does that mean Westridge customs aren’t hot? Not necessarily. The under 2.5 million price point has buyers waiting for new listings. Knowing where the market is strong and where it isn’t is really something you have to track daily, because it can change quickly. Stevenson Ranch had a similar experience over the last 60 days. I listed a 3600 square foot pool home in March that I had difficulty selling a few years ago because it backed a busy street. The sellers were ready to try again and we determined $899,900 was “top dollar”. 10 showings and 4 offers later we sold for $925,000 with no appraisal contingency (the home would not have appraised at that price). Every home listed since has tried to piggy back off that sale with little or no success. Today there are more than double that many pool homes, and they aren’t getting the same attention as in March. Does that mean that pool homes in Stevenson Ranch aren’t hot? Well, it depends on what you have. There is no questioning though that the confidence buyers and sellers had in March is different today.
To sum up then, be thankful for a market that is strong and reasonably steady. It’s almost hard to believe that just a few years ago prices were going down, not up. Almost no one tried to sell in the higher price points unless they had to. Today they can and do if they are patient. We still don’t have enough homes for sale, which means many homes will continue to be well received when placed on the market. Just don’t expect that everything is hot and that what is hot today will still be hot tomorrow.