21/09/2012
San Francisco Chronicle
Shortage of California homes up for sale
After years of having too many homes and not enough buyers, real estate agents in California now have the opposite problem – too many buyers and not enough homes for sale.
Making sense of the story
The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported Monday that its statewide inventory of unsold homes index for existing, single-family detached homes fell to 3.2 months in August from 3.5 months in July and 5.2 months in August 2011.
The index reflects the number of months needed to sell the supply of homes on the market at the current sales rate. A six- to seven-month supply is considered normal. When the number goes higher, inventory is plentiful and it’s considered a buyer’s market. When the number goes lower, the advantage goes to the seller.
Declining inventory helps explain why the statewide median price of an existing, single-family detached home rose to $343,820 in August, up 3 percent from July and up 15.5 percent from August 2011, according to C.A.R.
Nationwide, the inventory of homes for sale also has declined. In July, there was a 6.4-month supply of homes compared with 9.3 months in July 2011. The current number is in line with the long-term average, according to the NATIONAL ASSOCIATION OF REALTORS®. However, NAR also acknowledges there are “acute shortages” in places such as California, Arizona, Nevada, and parts of Florida.
Also constraining supply is the fact that so many homeowners are underwater – or owe more than their homes are worth – and unable to sell without taking a loss. As prices rise, more homes will increase in value, but it’s going to take time. Meanwhile, there are still a lot of homes that are not likely to come onto the market.
At some point, the balance will tip, but it’s hard to predict when. When banks decide prices are high enough, they will start unloading houses they have been sitting on, according to the chief economist for Trulia.
