This is another way the banks and the federal government are trying to keep "gravity" out of this real estate trend. By keeping supply in demand , banks: slowly releasing inventory,now being ethical on loans,
Feds : keeping intrest rate low , buying the cooperation of the banks.
They are holding back the flood of inventory on the market.

The question remains, in this world economy, how long do they need to hold it back and how long can they?!

And when the dam breaks how low will pricing go? How will houses appraise , will everyone need a 3% down to qualify for a loan.
Are the people that are buying now 2-3rd quarter April - Sept , going to see a small or significant drop in value on their new purchase?
many variables will contribute to the outcome
intrest rates, banks loaning abilities, peoples ability to affoard a down payment and qualify.

Sheena
Low inventory is not just in Simi Valley. A balanced market is considered six months of listings, and most areas are below three. Just my opinion, I'd say we are at the bottom of the market.

I think that the lenders are simply overwhelmed with short sales and foreclosures and we may remain at the bottom of the market for a while...until the current and future inventory is consumed.

Sheena,

Many people cannot afford to sell their homes - this keeps inventory low.

Short Sales right now have a 8% chance of closing nationally. In Simi Valley out of the 290 escrows (SFD) 160 are short sales. Simi Valley is closing less than 100 single family detached closings per month. In June for single family detached, 83 homes closed escrow, 20 were shorts and with 160 shorts in escrow that is a 12.5% closing ratio, somewhat better than the national average.

Short sale is not the best option because many times the lender will retain recourse rights against the Sellers as part of the agreement. This is not fun for sellers. 90% of the listing agents are not qualified to take a Short Sale listing which further complicates the process.

Next look at Sellers with equity. Sellers with equity are not excited to sell their homes now or do anything because we can all remember when people were paying much more for these same homes. Even though the gain was on paper, this affects motivation to sell.

That leaves the foreclosure market.

If anyone can answer why the banks are letting borrowers go 12 or more months past due without foreclosing, then we might better understand where the phantom inventory is.

I disagree with my colleges; this is not a buyers market, this is another stupid market. Inventory is tighter than when market was going up 20% per year. I am watching buyers bid up entry level homes in the ebay bidding frenzy created by the low inventory; homes they would not normally buy if there was a balanced supply of inventory. How long will this shortage last? Not forever, any spike in interest rates will drive away buyers, in the hot markets of just a few years ago every time the interest rate crested 6.0% the market cooled off, inventory grew. Even buyers that could qualify for liars loans rejected rates in the sixes. Buyers aren't going to chase the market up again, we will see some temporary stabilization but another shovel full of reality is around the corner with an increase in inventory and higher interest rates.

Last time tight inventory put buyers in a half nelson on their purchase, as soon as times got tough, buyers walked on homes they were never excited about in the first place.

Right now the Renter looking to replace rent and buy an entry level (SFD) home, has 5 homes to look at in Simi Valley and they all are homes these buyers would pass over if there was a healthy supply of inventory.

We might be near a bottom, but a fast climb out ... no way.

In the excitment of multiple offers many agents have forgotten about the adjustable reset schedule:

http://homebuysblog.com/2008/10/15/adjustible-rate-mortgage-…

http://homebuysblog.com/2009/01/25/phantom-inventories-can-b…

Facts are; fewer Single Family Detached Simi Valley Homes sold in June than in May, fewer homes sold in April than in March, May has been the best month this year but is still way below normal healthy levels. The upper price ranges and sales are not mirroring the entry level prices and sales. This market is fragile, do your homework.

Last, I do BPO work, in the last month my case load has increase 1000% percent (yes one thousand) I will have 10 done by Thursday this week. I work BPOs from the west San Fernando Valley to Simi Valley and the Conejo. I can see what is happening in the area and can see what is looming.

Hi Sheena,

Yes, the moratoriums will start to reduce the number of foreclosures we will be seeing as banks continue to improve their short sale processes & procedures. But, down here in San Diego, we are seeing banks holding onto some of their inventory (sometimes renting it out) in order to provide a trickle of REOs entering the market rather than a solid stream. This is in an attempt to stabalize that market. And its working.

Best of luck out there!
Tara

Tara Steinke
Residential Sales and Appraisal
San Diego
619-384-6014
SDRealtor.Tara@gmail.com

Simply put, it's not a buyer's market anymore. Prices are historically low, rates are historically low, the federal government is providing an $8,000 credit for first-time buyers and the California Franchise Tax Board is throwing in a $10,000 credit for buyers who purchase new (never been occupied) home. Anything under $500,000 is FLYING off the market. Most houses are receiving multiple offers and are selling for above asking price. Houses, short pays and foreclosures ARE being listed, they are just selling VERY fast. If you want one, you have to move quickly.