This week I read an overview of the latest Corelogic US Home Price Report, which stated that unsold housing inventory of available homes for sale has reached the lowest point nationally for the second quarter of this year for over 30 years!
More specifically, this means that unsold inventory represents just a 1.9% share of all households. These are quite staggering figures.
This information coincided with receiving the latest real estate statistics for Santa Clara and San Mateo counties, where the months of available inventory based on closed sales has fallen by 50.6% in Santa Clara and 28.5% in San Mateo.
Of course low inventory is not exactly a new phenomenon and has been with us for some time. But these latest statistics demonstrate that the situation certainly isn't improving.
And yet all this occurs against the backdrop of profoundly enthusiastic buyer sentiment with a continuing rush to find the right home while mortgage rates remain so low. This, in turn, is driving supply levels even further downward, albeit for a very good reason. The average seller now sees a sold price vs. original price ratio of 104% in San Mateo and 103% in Santa Clara. In other words, sellers are, on average, receiving more than their original asking price!
Although our local markets are doing very well, I think it’s undeniable that most sectors would be doing even better right now if supply levels were better. It's impossible to precisely quantify how many buyers have temporarily abandoned the idea of moving through frustration at not finding a home that ticks all their most essential boxes, but it is surely happening to a certain extent.
We lack a single silver bullet reason why more sellers aren't taking advantage of what is arguably the best possible scenario of low competition and consequently high market visibility. I do think, however, that there are a number of contributory factors at play, including the fact that many homeowners have refinanced while mortgage rates are so low and feel content and somewhat locked in to their existing property.
While the recession years are thankfully becoming a distant memory, it's likely we're still seeing some fallout in terms of abandoned moving plans that have simply never been revisited, while homeowners have invested more heavily in their current homes. And it also has to be said that the current shortage of properties for sale isn't motivational if a move is being contemplated.
But the simple fact is that homeowners with well-located and excellently maintained residences across most sectors are very likely to find the selling process not only straightforward, but very likely to lead to multiple offers above the asking price.
Ultimately, determined buyers who work with their agent to really explore the market are still connecting with and purchasing the ideal home. It's just harder work than it used to be.
So whether you're buying or selling, why not contact us today for expert advice on how best to tailor market conditions in your favor.