Submitted by Mark Hanna
Courtesy of MarketMontage. View original post here.
Do any of these quotes sound familiar?
Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting. And real estate agents are vying fiercely to represent the few sellers that do exist.
Nope, it is not 2005… this is 2012 Southern California. It appears that quite a few forces are conspiring to create a boomlet if you will. Those who are still underwater at this stage are probably so underwater they have no chance to sell (want to bring $250K cash to closing?). Building activity has shrunk dramatically. And Ben’s easy money has big time investors looking for invesment opportunities – and why not mass purchases of property… better than that 0.08% money market. So are these necessarily typical reasons for an inventory shortage? Nope – but it’s happening just the same.
Via LATimes:
- Housing inventory has sunk to levels not seen since the bubble years. The number of American homes with a “for sale” sign hit 2.5 million in April, the lowest number for an April since 2006, according to the National Assn. of Realtors.
- The sharp drop in inventory along with rock-bottom interest rates have helped stabilize even some of the hardest-hit markets, including the Southland, Las Vegas, Phoenix and Miami. Some real estate professionals are concerned that the lack of inventory might turn off potential buyers, stifling the recent recovery in home sales.
- The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized. Fewer borrowers are entering default, and banks are better managing the properties they do have on their books. In addition, professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals.
- A dearth of new construction also is constraining supply. In April — the most recent month for which figures are available — the number of completed new single-family homes available for sale stood at 46,000, the lowest level since the Census Bureau began keeping track in 1973. Some 70,000 were under construction, also near historic lows.
- The inventory problem has been exacerbated by the plunge in home prices since the go-go years. Many people who bought at the top of the cycle are so deeply underwater, they can’t get the price they need to sell and are therefore not bothering to put their homes on the market. “We know negative equity holds back home sales, but it also holds back the listing of sales,” said Sam Khater, an economist with CoreLogic, a company that tracks the mortgage market. “Today it is holding the market back.”
- In Southern California, inventories have plunged over the last year. The number of homes listed for sale in April fell 35% in Los Angeles County and was down 42% in Orange, 39% in San Bernardino, 42% in Riverside, 53% in Ventura and 43% in San Diego counties, according to online brokerage Redfin.
- The number of days a home sits on the market has also decreased, meaning properties are selling faster. For the entire six-county Southern California region, the median number of days a home sat on the market fell to 33 last April from 43 the same month a year earlier.
- “There is an incredible shortage of houses on the market right now, and I haven’t seen a fever like this for houses in like maybe 10 years,” Glickman said. “If anything priced within reason comes on the market, there are six or seven or 10 offers.”
- The market for bank-owned homes — known as real estate owned — has gotten so competitive that longtime foreclosure king Leo Nordine has decided to try selling regular homes now, declaring: “REO is kind of over.”
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