- Rising rents are motivated more potential first-time buyers to eye a condo or townhome purchase.
- Sherman Oaks, Studio City, Encino and Tarzana seeing an increase in teardowns.
- The San Fernando Valley enter 2016 with a less than two months of supply.
The San Fernando Valley real estate industry is coming off a banner year.
Existing single-family home prices rose by nearly 7 percent and the volume of closed sales (6,108 homes) reached its highest tally in five years.
This year, sales activity is expected to only slightly increase, while appreciation will slow.
According to Gina Uzunyan, president of Southland Regional Association of Realtors (SRAR), affordability issues may keep price appreciation in the low single-digit range. Entering 2016, the median resale price of an existing single-family home in the valley stood at $554,208.
Since peaking with a 24.1 percent year-over-year increase in 2013, home values have continued to tamper on an annual basis in the region.
Uzunyan also expects to see fewer instances of multiple offers on properties, primarily because of home prices. This should lead to fewer agents utilizing the under – or over-pricing marketing strategy and instead properly pricing listings.
Home values combined with minimal inventory, roughly 1.8 months, suggest that overall sales volume shouldn’t be able to noticeably surpass 2015 levels.
Pricey San Fernando Valley real estate markets getting more expensive
In San Fernando’s more expensive markets, Uzunyan is noticing more investors purchasing older homes, tearing them down and building new Cape Cod-style homes in their place.
This is occurring most in Sherman Oaks, Studio City, Encino and Tarzana. These new residences typically boast a host of home-technology features and command sales prices that noticeably exceed the region’s median value.
Demand for condos, townhomes on the rise
While activity and values in the single-family market may slowdown, the valley’s condo/townhome market appears prime for a solid 2016.
Thanks to rising rents, a growing number of valley renters are eyeing condo or townhome purchases, as this product represents the most affordable housing option for first-time buyers. A number of these prospective buyers are younger and can’t qualify for a single-family home.
During 2015, roughly 2,150 condos sold in the region, with a median sales price of $351,208. Both of these figures represented around a 9 percent year-over-year rise.