The newest problem for the slowly improving housing market isn’t a shortage of serious buyers, it’s a shortage of good homes.
Six years after the housing market began its slide, dragging the U.S. economy into recession, this year’s spring season — traditionally the busiest period for home sales — has been the strongest since the crash.
Real estate brokers report bidding wars, albeit more modest ones than during the bubble years, and buyers are snapping up homes much more quickly than only a few weeks ago.
With housing inventory at a low, would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. And real estate agents are vying fiercely to represent the few sellers that do exist.
Housing inventory has sunk to levels not seen since the bubble years. It has become more competitive than most experts thought it would be.
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 by approving short sales quicker and allowing more loan modifications.
In addition, professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals.
With the downturn, it seems like there are a lot of people who have been waiting in the wings to pounce, and because the rates are low, there is just a lot more competition. In many cases there are multiple offers on properties.
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 lack of available homes is maddening for those consumers who thought 2012 would be the year to buy. In California, inventories have plunged over the last year. The number of days a home sits on the market has also decreased, meaning properties are selling faster.
The inventory problem has been exacerbated by the plunge in home prices since the boom 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.
At this point, no one really know what is in store for the housing market and what direction it will take. There are many issues still out there such as high unemployment and continued economic weakness that can derail this at any time.