SILICON VALLEY ASSOCIATION OF REALTORS – Low inventory continues to plague much of the Bay Area.
MLSListings Inc. reports market activity “slowed to a crawl for nearly all indicators” in the month of June for Santa Clara County and four other neighboring counties. The severe shortage of homes is impacting home sales, sparking multiple offers and slightly higher home prices in a number of communities.
The Silicon Valley Association of Realtor (SILVAR) multiple listing service provider reports June’s closed sales of single-family homes in the counties of Santa Clara, San Mateo, San Benito, Santa Cruz and Monterey were flat compared with closed sales in June last year.
Home sales in the five counties dropped nearly 9 percent compared to the previous month. Santa Clara County had 1,093 closed sales of single-family homes, virtually unchanged from 1,097 in June 2011.
Year-over-year inventory is markedly down from previous years. Inventory of single-family homes saw the largest drop in Santa Clara County, where June’s inventory took a dive of 38 percent from last year.
San Mateo County’s year-over-year inventory dropped 37 percent; San Benito County, 35 percent; Monterey County, 28 percent; and Santa Cruz County, 16 percent. Santa Clara County’s June inventory of 2,589 homes was down 42.2 percent from inventory in June 2003 and down 57.4 percent from 6,071 homes on inventory in June 2008.
The combination of low inventory and strong home buyer interest may be good news for some Bay Area homeowners who have equity in their homes and have been waiting to put their home on the market. On the other hand, the situation has been frustrating for first-time home buyers who have to compete with all-cash investors who are able to bid up prices.
With low inventory, many homes are besieged with multiple offers, which in turn raise the median sales price. According to the MLSListings report, Santa Clara County saw its June 2012 median price of $695,000 jump 9.4 percent over the previous year. The June median for single-family home in Santa Clara County is 26.2 percent higher than the median of $550,500 in June 2009, when home prices resumed their upward trend.
There are many reasons that can explain the low inventory, according to Suzanne Yost, SILVAR president.
“There are homeowners with equity who are still unwilling to sell at today’s prices. Others may not have enough equity in their homes for a down payment and closing costs for their next home. Then there are those who may not be able to sell their homes because they are underwater on their mortgage,” explained Yost.
Unless inventory opens up, home buyers will continue to be squeezed in this tight market, said Yost.
“Many families are already having a difficult time finding a place to live. We will continue to see first-time home buyers facing strong competition from investors with cash. For motivated sellers, pricing is a key factor,” said Yost.