- All-cash deals are accounting for a higher share of overall resale transactions.
- Banks may be less willing to lend on Porter Ranch homes moving forward.
- The San Fernando Valley home sales market as a whole is said to be in a "sluggish" state.
In the wake of the late October 2015 Porter Ranch gas leak, which sent nearly 100,000 metric tons of methane into the atmosphere, several area real estate agents cited that minimal buyers were searching “Porter Ranch” or its ZIP code online.
These sentiments appear to have been on point, as between November 2015 and January 2016, home sales activity in Porter Ranch dipped by 44 percent when compared to the previous three-month period.
According to a report from RealtyTrac and Greenfield Associates, while a seasonal drop in home sales activity was expected, the 44 percent dip was more than 2.5 times higher than the seasonal drop experienced in Los Angeles County, 17 percent., during the same period.
When looking at sales within Porter Ranch on a map, the impact of the gas leak is made clearer.
According to Daren Blomquist, senior vice president at RealtyTrac, home sales activity north of Highway 118, which is closer to the actual gas leak, was down 60 percent, while sales south of the highway dipped 14 percent.
Clifford Lipscomb, director of economic research at Greenfield Advisors, suggests buyers may find that banks are less willing to lend on properties located in the San Fernando Valley submarket moving forward.
This would result in all-cash sales accounting for a higher share of overall transactions, something that is already occurring.
The firms’ report stated that the share of all-cash sales rose by 50 percent spanning November to January, which was five times the seasonal uptick in cash deals seen in L.A. County.
Of note, the leak, which occurred at Southern California Gas Co.’s Aliso Canyon natural gas storage facility on October 23, was plugged this February.
Sales down valley wide
The San Fernando Valley home sales market as a whole is said to be in a “sluggish” state entering the spring.
During the first two months of this year, 652 existing single-family homes sold in the valley, a slight decline from the 659 homes that traded during the same period last year, according to stats from Southland Regional Association of Realtors.
Resale activity in March was likely also down, as entering the month the volume of total pending escrows had decreased by nearly 11 percent on a year-over-year basis.
Record home prices are the prime reason for the valley’s sluggishness, as buyers in the valley are reportedly balking when they hit a certain price point.
In February, the median price of an existing single-family home reached $561,000, the highest price seen in any February dating back to 2007. A lack of supply, 2.8 months, is the primary market condition that continues to drive home values up.