Pending home sales in the state rose in January from both the previous month and the previous year, according to information released this week by the California Association of REALTORS®. The C.A.R. report also indicates distressed home sales increased, comprising about half of all homes sold that month. Short sales were at their highest level in three years.
Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market. C.A.R.'s Pending Home Sales Index rose from a revised 91 in December to 102.4 in January, based on signed contracts. The index also was up from the 93.1 recorded in January 2011, marking the ninth consecutive month that pending sales were higher than the previous year.
Equity sales made up 49.9 percent of home sales in January, down from 52.7 percent in December but up from 46.5 percent in January 2011. The total share of all distressed property types sold statewide increased to 50.1 percent in January, up from December's 47.3 percent but down from 53.5 percent in January 2011. Short sales comprised 23.8 percent, up from the previous month's share of 22.2 percent and 22.2 percent as well in January 2011. The share of REO sales in January was 25.9 percent, up from December's 24.6 percent, but a drop from the 30.8 percent in January 2011.
Information from MLSListings Inc., the multiple listing service of the Silicon Valley Association of REALTORS® (SILVAR), shows 2,056 single-family home sales under contract in Santa Clara County in January, down from 2,062 in the previous month and from the prior year, when there were 2,141 home sales under contract in January 2011. Additionally, C.A.R. data shows 41 percent of homes sold in Santa Clara County in January were distressed properties, up from 37 percent in the previous month, but below the 48 percent in January of 2011.
The increase in short sales may indicate that lenders have begun moving distressed properties to the market on a timely basis. "Lenders are becoming more realistic and see that short sales, though complicated, can be a better option than foreclosure, and a situation that could benefit all parties involved. The distressed sellers get to avoid foreclosure, the banks may lose less money," says SILVAR president Suzanne Yost. "The foreclosure process could cost lenders more money the longer a foreclosed property stays on the market. Maintenance of a vacant home and getting the home in condition to sell may cost the lender more than if they would have opted for a short sale."
However, Yost advises homeowners to consult a real estate lawyer and professional tax advisor on what would be a best option for them. "Every homeowner's situation is different. Some owners may be better off choosing foreclosure over a short sale. It is always best to contact a lawyer and tax advisor, so they can help you decide what's best for you," explains Yost.
Yost adds that inventory continues to be a challenge in the area for local REALTORS®. The MLS shows 633 single-family homes on inventory in Santa Clara County in January, a slight increase from 581 in the previous month, but down from 868 in January 2011. In January 2007, the year before the financial crisis, there were 2,671 single-family homes on inventory in Santa Clara County.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.