In Today's Changing Real Estate Market the Competition is Heating Up

According to an article in the June 10th edition of the Los Angeles Times, as the current inventory of homes continues to drop, real estate agents, as well as prospective buyers and sellers are beginning to see the "new" real estate market -- multiple offers, bidding wars and decreased time on the market, as the competition for homes in some areas of the country started to heart up. Some buyers are even trying to find and make offers on homes before they are even listed!

The newest problem for the slowly improving housing market isn't a shortage of serious buyers, it's a shortage of good homes. 

Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting. 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. The number of American homes with a "for sale" sign hit 2.5 million in April, the lowest number for an April since 2006, according to the National Assn. of Realtors.

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 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.

In addition, professional investors bankrolled by private equity firms and hedge funds are pouncing on bank-owned homes, often turning them into rentals.

A dearth of new construction also is constraining supply. In April — the most recent month for which figures are available — the number of completed new single-family homes available for sale stood at 46,000, the lowest level since the Census Bureau began keeping track in 1973. Some 70,000 were under construction, also near historic lows.

The inventory problem has been exacerbated by the plunge in home prices since the go-go 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. 

(Source: Shortage of homes for sale creates fierce competition By Alejandro Lazo, Los Angeles Times; June 10, 2012) 

So what's this mean to you as a potential seller? If you're looking to list your home, then pricing your home correctly is going to be a key factor in getting buyers' attention. And if your looking to buy? Make sure you have an agent who will work with you to find what you need at a price you can afford.