Shrinking Inventory of Homes For Sale in the Golden State
The inventory shortage is nothing new. We’ve written a few times about how fewer homes for sale means more competition, bidding wars, and a lot of disappointed buyers. The upside of the limited supply is that it should push prices up, and though it would mean less chance of getting a “steal”, that’s better for the market and buyers’ investments on the whole.
Real estate is a seasonal industry, and usually August results in one last push by sellers before the summer season comes to a close, but not this year. Listed homes for sale dropped 1.2 percent nationwide in August of 2012 compared to July, bucking the seasonal pattern.
“Inventory declines have typically preceded stronger prices if demand stays the same, because more buyers are chasing fewer homes. But low inventory could also curb transaction volumes if buyers, frustrated by the lack of choice, sit on the sidelines,” writes Nick Timiraos for Developments.
13 of the 15 cities with the largest year-over-year inventory declines were in California, including Oakland (-58.4%), Stockton (-45%), Fresno (-43.1%), Sacramento (-42.4%), Riverside-San Bernardino (-41.8%), Bakersfield (-41.4%), and San Jose (-41/1%). Could this mean brighter days ahead for Golden State home prices? Perhaps.
Now sellers may not be flooding the market, but people are definitely buying. Existing-home sales hit their highest level in 27 months, according to the National Association of Realtors. But as people finish the summer buying season, closing on their homes, there’s a question of whether buyer demand is actually fading.
Local Agent Perspective: Oakland, CA
Since I’m an Oakland local, I wanted to know why Oakland is leading the country in inventory declines, so I called up local agent, Wayne Cory. Here’s what Wayne had to say:
“There are a lot of things going on here. Oakland boomed when real estate boomed. And when the market started to bust, it forced a lot of homeowners out, whether through short sales or foreclosures. And the people who could afford to stay are sitting tight, waiting for prices to go back up.
The market has really run its course, and the people who wanted to bail or needed to bail already have.”
Wayne also mentioned a number of “up-and-coming” neighborhoods that “just didn’t make it all the way” before the economy tanked. As a resident of Oakland during its so-called renaissance, I’ve seen neighborhoods begin to radically change with artists, new restaurants, rising rents, only to get pulled back down again by the city’s persistent economic and social troubles.
While Oakland represents what’s happening in much of the nation – foreclosures beginning to slow down, sellers waiting for prices to inch up more – I asked Wayne why Oakland led the charge with such a huge decrease of 58%.
"Oakland is huge, you know? It’s not like other smaller cities, and there are so many different neighborhoods playing into what’s happening.
Most people that had to sell in Oakland have already done so, or have been forced out. For others that can afford to wait it out, that is exactly what they are doing, waiting. This is just one of the reasons why there is not a lot on the market today in Oakland.
Oakland is a vast city with its diversity and neighborhoods, it is a great place to live and call home as so many do."
Unfortunately, I know that to be all too true.
In any case, California is known for our Indian Summer – maybe we’ll get that last burst of new homes on the market after all!
- National Low Inventory: A Mixed Blessing, and Possibly A Temporary One
- Home Sellers: How the Nation's Low Inventory Affects You
- Must Be the Money: the Almighty All-Cash Offer
Sarah Louise Green lives in theSan Francisco Bay Areaand writes about national real estate trends, home financing, advice for buyers, and DIY projects for the home and garden.