Although this issue affects the San Joaquin Valley, the topic of housing shortages is relevant to the wider Bay Area and nation.
More than a local issue
Across the United States, the market held 1.94 million previously owned homes in February, a total of four to seven months of supply.
During the same period, there were 150,000 new single-family homes on the market, representing 4.4 months’ worth.
A six-month supply of homes is typically considered a good level for supply and demand, so the nation is a little short.
Challenges in home-buying
Bidding wars are in play whenever homes are in short supply, as buyers put in offers and sellers are met with sometimes 25 or more on the same home.
Some are cash offers. Bids are frequently above the sales price, by varying amounts.
The risk is that these homes may not appraise for equally high prices once the buyer goes into escrow.
This can be a frustrating proposition for buyers, as they may spend many months shopping for a home.
It also has an economic impact for realtors, as there are fewer homes to sell and the whole process is delayed by a lack of inventory.
Why a shortage exists
Selma Hepp, from the California Association of Realtors, said one of the main reasons for the inventory shortage is a drop in sales of foreclosed homes. Banks are “steadily” releasing homes to the market, but more bulk releases are going to investors.
Investors aren’t flipping homes — reselling them — as much as they once did. Instead, investors are renting out more properties and waiting for values to increase.
On the other hand, there are also fewer individual buyers, as opposed to investors, who are qualified to buy property. Following the economic and mortgage challenges of past seven years, it might take awhile for people to qualify to buy again.
Howard Baker, a broker at Imara Mortgage and Realty, stated that “there may still be low economic confidence and that there is a perception that it is difficult to get financing. A large number of people have credit issues, and it takes time to recover.”
There’s no immediate prospect for the inventory situation to change dramatically — it could remain a challenge for months to come.
In the longer term, there are plans for new home developments in Tracy. Local advisers are optimistic about this. See the city of Tracy website for more specific information about plans for development: www.ci.tracy.ca.us/?navid=595.
• Carla Carroll is a senior loan officer at Diversified Capital Funding, in Tracy. She can be reached directly at 914-3753 or firstname.lastname@example.org.