Competition for lower-priced homes in California is so hot that the number of cheaper homes available for sale has sunk more than 40% in the last year, pushing out many would-be buyers. Homes that sold for $313,200 or less were the most competitive type of home nationally, but nowhere did inventory in that price range drop more than in the Golden State, according to a report released Thursday by real estate website Zillow. The decline in homes for sale is frustrating many people interested in jumping into the housing market — home shoppers tantalized by the drop in prices and record-low mortgage interest rates.
Behind the inventory squeeze is a sharp decline in the number of foreclosed homes on the market. Foreclosure filings fell in September to the lowest level in more than five years, according to a report by RealtyTrac released Thursday. Substantial decreases in California and some other states hard hit by the collapse of the housing bubble helped reduce filings to 180,427 last month, down 7% from August and 16% from a year earlier. The last time filings were that low was in July 2007.
According to the Zillow report, Central Valley markets have seen the biggest drops in the supply of lower-cost homes, with inventory down 59.7% in Fresno and 55.4% in Sacramento. San Francisco’s supply fell 53.2%. In Los Angeles, supply was down 45.1%. Nationally, the bottom tier of homes for sale has had a decline of about 15.3%.
The following are the metros that have seen the largest year-over-year drops in for-sale inventories (September 2012 compared to September 2011):
1. Stockton-Lodi, Calif.: -63.04%
2. Sacramento, Calif.: -60.26%
3. Oakland, Calif.: -57.14%
4. Riverside-San Bernardino, Calif.: -42.57%
5. San Jose, Calif.: -41.97%
6. Fresno, Calif.: -41.26%
7. Bakersfield, Calif.: -38.92%
8. San Francisco, Calif.: -38.39%
9. Seattle-Bellevue-Everett, Wash.: -38.34%
10. Atlanta, Ga.: -37.15%
Faced with these realities, there are a few steps that Buyers can take:
- Don’t get discouraged. Yes, I know you are not getting your offers accepted immediately. This is the nature of the market, patricularly in the case of moderately priced homes.
- When you find a home, be prepared to act immediately. The days of waiting are over. If you don’t act, the property will probably be gone.
- Have your financing in order. Have your Lender’s pre-qual or better yet a pre-approval ready. The Seller wants to know that if the Seller accepts your offer the sale will complete.
- Avoid asking for closing costs if possible.
- Be diligent in your search. We can provide you with Daily updates of the new homes as they come on the market.
- Know what you want. Don’t waste your time looking at homes with 2 bedrooms if you really need 4 bedrooms.
- Paint colors can and do change. Don’t be so particular in your requirements that it is impossible to find a property. I am not suggesting that you settle for just anything, rather, don’t discount properties that could easily and inexpensively be made into your ideal home.