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 â€“ too many buyers and not enough homes for sale.
Making sense of the story
- The CALIFORNIA ASSOCIATION OF REALTORSÂ® (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.Â A six- to seven-month supply is considered normal.Â When the number goes higher, inventory is plentiful and itâ€™s considered a buyerâ€™s market.Â 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.Â In July, there was a 6.4-month supply of homes compared with 9.3 months in July 2011.Â The current number is in line with the long-term average, according to the NATIONAL ASSOCIATION OF REALTORSÂ®.Â However, NAR also acknowledges there are â€œacute shortagesâ€ in places such as California, Arizona, Nevada, and parts of Florida.
- Also constraining supply is the fact that so many homeowners are underwater â€“ or owe more than their homes are worth â€“ and unable to sell without taking a loss.Â As prices rise, more homes will increase in value, but itâ€™s going to take time.Â 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 itâ€™s hard to predict when.Â When banks decide prices are high enough, they will start unloading houses they have been sitting on, according to the chief economist for Trulia.
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