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The San Fernando Valley is Hot, Hot, Hot!

Just in: the latest information from the Southland Regional Association of Realtors, as reported in the Daily News, is that the San Fernando Valley is heating up – with home sales reportedly leaping 26 percent in April, 2009. Moreover, the median price of a previously owned Valley house actually increased by 3 percent in April!

I can’t say I’m completely surprised by these stats, having recently seen lower priced houses fly off of the market, being snatched up by eager investors and homebuyers, frequently with multiple offers. The reasons are straightforward: historically low interest rates and excellent housing affordability. Many people recall what happened after the last real estate crunch of the early 90’s and are eager to buy in at such attractive prices, and many, many more can afford to buy now. In particular, the SRAR’s data on housing affordability makes the case:

“The minimum household income needed to purchase an entry-level home at $213,040 in California in the first quarter of 2009 was $38,090, based on an adjustable interest rate of 4.96 percent and assuming a 10 percent down payment. . . . The monthly payment including taxes and insurance was $1,270 for the first quarter of 2009.”

This amounts to a 41% lower qualifying income than just twelve months ago. No wonder Valley buyers are getting back into the game. I’m guessing that the real estate weather this summer will get even hotter – barring any radical spiking in the interest rates, of course.