Local Market Trends – Lack of Inventory Besets Market

By Robb Fleischer

Lack of Inventory Besets Market

Low inventory is taking a toll on buyers’ patience. With the limited number of properties for sale in San Francisco, multiple offers are becoming the norm. The problem is only one party can buy a property.

On the last day of May, there were 804 homes and condos for sale. That was down from 870 in April and down from 1,529 in May 2011.

Last month there were 493 properties sold. That equates to 1.6 months of supply on the market. In a balanced market, we would have a 5-6 months supply of inventory.

As we mentioned last month, the phantom inventory that was the rage last year just evaporated. Banks own a total of 632 properties in San Francisco. Even assuming none of them are already in escrow, it is still only 1.3 months of supply.

Continue reading here http://rereport.com/sdc/print/RobbFleischerSF.pdf

Average home price now at it’s highest level since June 2010

San Francisco Market Heating Up

Low inventory and high demand are pushing the local real estate market to the extreme with buyers waiving contingencies, property inspections and even appraisals.

The high end of the market is on fire. The low end of the market is being driven by investors with cash and is also totally out of whack. The middle market, the move-up market is soft because the entry-level homeowners are still underwater.Prices have followed with the average home price now at it’s highest level since June 2010.

What’s next? That’s hard to tell because inventory is incredibly low. We don’t see that changing much in the near future for several reasons.

First, there is not a lot of new home building going on, which is necessary to relieve the pressure.

Second, many existing homeowners aren’t going anywhere. If they have good jobs here, where would they go?

Read the full report here http://www.rereport.com/sf/robb/

Pending Sales Up Sharply in October

Pending sales were up 10.4% in October compared to September, and up 9.2% year-over- year, according to the National Association of REALTORS®.

Lawrence Yun, NAR chief economist, said improved contract activity is a hopeful sign. “Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows and there is a pent-up demand from buyers who normally would have entered the market in recent years. We hope this is indicates more buyers are taking advantage of the excellent affordability conditions,” he said.

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