Shortage of homes for sale creates fierce competition ~ Tips to maximize your home appraisal

Shortage of homes for sale creates fierce competition

With housing inventory at a low, would-be buyers are scrambling to bid on homes before they're even listed, and real estate agents are vying to represent the few sellers that do exist.

House for sale
During an open house event, a steady stream of real estate brokers flows through a three-bedroom bungalow for sale in Los Angeles’ Highland Park area. (Allen J. Schaben, Los Angeles Times / June 7, 2012.

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.

David Dennick, who lives in Echo Park and works as a television editor, has been searching for a home with his wife, Denise, for about two months. The couple have already bid on three properties. They are hoping to find a home for less than $525,000, which is $25,000 more than they originally had hoped to spend.

"It is much more competitive than we thought," said Dennick, standing in the entrance of an Eagle Rock open house on a recent Sunday. "It is just frustrating because we thought we would really be able to buy a house; we are a middle-class family."

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.

"We know negative equity holds back home sales, but it also holds back the listing of sales," said Sam Khater, an economist with CoreLogic, a company that tracks the mortgage market. "Today it is holding the market back."

The lack of available homes is maddening for those consumers who thought 2012 would be the year to buy.

In Southern California, inventories have plunged over the last year. The number of homes listed for sale in April fell 35% in Los Angeles County and was down 42% in Orange, 39% in San Bernardino, 42% in Riverside, 53% in Ventura and 43% in San Diego counties, according to online brokerage Redfin.

The number of days a home sits on the market has also decreased, meaning properties are selling faster. For the entire six-county Southern California region, the median number of days a home sat on the market fell to 33 last April from 43 the same month a year earlier.

Eddie David and his wife, Tiana Rezac, have felt the unexpected shortage firsthand. The two were sure they would buy a house this year until they tripped into the perplexing new housing reality. After being outbid on three different properties in neighborhoods from the Westside to Atwater Village, they shelved the search.

"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," David said. "There were multiple offers. We tried to get in on a couple other homes, and even though it had been just a week or two weeks, it was just too late."

Alex Gruenberg and his wife, Kristina, both 27, lost out on a home that ended up going for $30,000 more than they offered. The recently married couple have new jobs in the area and are looking for a pedestrian-friendly neighborhood with decent dining options.

They are now trying to find homes before they are listed.

"We are really learning that there is sort of an inside element to that," Gruenberg said. "Things are going in days."

Tips to maximize your home appraisal


<a href="">Appraisal factors</a> image via Shutterstock.Appraisal factors image via Shutterstock.
Editor's note: The following item is republished with permission of See the original article: The Do's and Don'ts of Home Appraisal.
By Vanessa Brunner
Selling a home was difficult even before the market started to slide. Now, every penny counts more than ever, which means that every leaky window, every dangling gutter and every ugly cabinet can make a big difference in the price of your home. While we all have a natural tendency to nest in the places we live, the reality is that many of the changes we make (or don't make) can make or break our home's asking price.
What to do -- and what not to do -- before and after a home appraisal? We asked Houzz users and professional appraisers across the country for their tips.
When remodeling, DO tackle all the major features in each room.

Photo credit: Feinmann Inc.


DO have:

  • An open layout.
  • Newer, matching appliances; stainless steel.
  • Extra perks like small-beverage refrigerators, dual dishwashers, instant hot water, and a central vacuum clean-out.
  • Granite countertops.
  • Custom cabinetry.

DON'T try to fix outdated cabinetry or countertops. These need to be replaced if you want to add value -- new hardware won't be enough to fix them.

traditional bathroom by Rikki Snyder

Photo credit: Rikki Snyder

DO have:

  • New fixtures and mirrors.
  • A freshly painted tub, if necessary.
  • Natural light.
  • Good ventilation.
  • New or refaced cabinetry.

DON'T let your bathroom feel dark or have any outdated colors or materials.

traditional exterior by Kenny Craft,  CNU  LEED AP

Photo credit: Kenny Craft, CNU LEED AP

DO make a list of recent improvements to your home. Think big and small here -- this can range from renovating the kitchen to painting your deck. Make sure your appraiser has a list when comparing your home to others in the area.

DO talk to your appraiser before the inspection. Discuss your house and its history. Find out the appraiser's history, number of years in business, and knowledge of the area. "The key in getting a fair appraisal is to have an appraiser that is experienced and knowledgable in the local market, and that you've checked out," said Greg Wilkinson of Worth Every Dollar Appraisals in Atlanta.

DO ask your agent to do a walk-through with the appraiser. Houzz user Genevieve Llerena says this is the best decision she made. "She pointed out all of the work that I'd done and made sure the appraiser was familiar with all of the comparables in our area. She reminded him of how our location made a difference in the comparables."

Positives of Negative Equity on Home Prices: CoreLogic

Declines in the share of REO properties and in the months’ supply of unsold inventory are all leading to a revival in home prices, and these drops are being driven, in part, by negative equity, CoreLogic concluded in a report.
Basing the finding of rising home prices on its most recent home price index, CoreLogic reported that prices gained by 1.1 percent in April compared to the year before and by 2.2 percent from the month before in March. These were the price increases when including distressed sales. When analyzing prices after excluding distressed sales, prices increased by 1.9 percent year-over-year and by 2.6 percent month-over-month.

One factor helping boost prices is the decreasing months’ supply of homes, which dropped to 6.5 months in April, the lowest level in more than five years, according to CoreLogic.
While a lower supply during a time of growing demand is a positive for home prices, Sam Khater, chief economist for CoreLogic and author of the report, explained negative equity is the main reason behind the low supply, not an increase in sales.
Negative equity not only makes consumers more reluctant to buy, but it can also discourage homeowners from selling, leading to a smaller number of homes listed on the market.
Data from the analytics firm revealed that among the 50 largest markets, those with a higher share of negative equity have, on average, a lower months’ supply of inventory. For example, markets with negative equity share at or greater than 50 percent have an average months’ supply at 4.7 months, but markets with a less than 10 percent negative equity share have an inventory supply of 8.3 months on average.
Thus, as counterintuitive as it may seem, the high share of underwater homes is helping the market by at least keeping the supply of homes for sale low.
The impact of the deluge of underwater homes is actually helping to increase lower-prices homes, according to CoreLogic. This is because supply is tighter for lower-priced homes since negative equity is greater. In fact, over the last two months, these less pricey homes have seen an average yearly increase of 4.5 percent while higher-prices homes have increased by only about 0.6 percent.
So, despite reports of sluggish employment growth and increasing tension in the euro-zone, Khater sees reasons to expect price growth in certain markets.
“We have transitioned from pricing dynamics driven by economic weakness and high shares of distressed sales to one of restricted supply, which will likely exist for some time to come – reason for optimism in many hard-hit markets,” wrote Khater.


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