Supply of Homes for Sale Hits Record Low in State
As the prime home-buying season gets underway, the number of existing houses for sale across the state and most of Southern California stands at a record low, causing prices to soar and buyers' hopes to wilt.
Inventory is expected to remain tight through the summer, and many analysts believe the supply level will sink to unprecedented depths for the fifth year in a row.
"There just aren't enough homes on the market for sale," said James Pugash, chairman of Hearthstone, a San Francisco-based provider of capital for home builders. "If there was more inventory available, there would be many more home sales, I have no doubt about that."
Listings have declined for several reasons, analysts said. Some homeowners fear their jobs aren't secure and are reluctant to risk trading up. At the same time, economic prospects have been brighter in Southern California than in the country overall, reducing the housing turnover that comes with career transfers out of the region.
Some homeowners are delaying putting their properties on the market because they believe prices probably will rise still higher and give them an opportunity to sell on more favorable terms. Others are refinancing their home loans at today's low rates and using part of the equity to make improvements, allowing them to stay put.
Listings in San Diego County have plunged 59% from a year ago. In Orange County the drop was nearly 30%, and in Los Angeles County it was almost 27%, according to the latest first-quarter figures by the California Assn. of Realtors. The region's most populous counties suffered bigger drops than the state overall, where inventory fell 22%.
There are fewer homes for sale in every price range below $1 million, and the shortage is especially acute in homes priced under $300,000, the state figures show.
Lack of supply is "a phenomenon across all regions of the country," said David Lereah, chief economist for the National Assn. of Realtors.
Inventory is edging up nationally but still hovers near record-low levels. At the current selling pace, existing homes would be depleted in 4.8 months. Agents say a supply of about six months is needed to balance the market.
In California, the problem is far more acute. At the rate of sales in April, every home would be snapped up in two months if no more went on sale. The historical average is seven months.
