East Bay Housing Data – Glen’s Numbers through October 2011

The Pending/active ratio; this once reliable market indicator is now signaling that we are in a sellers’ market.

But, it doesn’t feel like we’re in a Sellers’ market

Inventory has gradually decreased since April, (down 19.2% compared to a 37% increase over the same period of time last year). Month’s supply is now only 2.7 months. We haven’t seen inventory this low since April of 2010. Lower inventory usually means more competition favoring sellers.

However, we’re seeing homes stay on the market longer, sell for under asking, more transactions falling out, many price reductions or homes that are simply being withdrawn from the market.

With lower home prices and record low interest rates, why aren’t more people buying now?

1)     The loss of equity for many home owners have kept many from “moving up” into the mid level priced homes.

2)     The continued turbulent economic news has scared many buyers back onto the fence, with concerns that things will only get worse or that their own jobs may be in jeopardy. They are waiting for the “uncertainty” in the markets to go away before committing to making one of the most important decisions of their life, buying a new home.

3)     Over 60% of the market now consists of first time home buyers and/or investors looking for bargains primarily focused on the lower end of the market, (homes that are selling for $300,000 and below).

4)     57% of pending sales in the area are now short sales. This has skewed the numbers because they have longer escrows and many transactions never close. Taking this into consideration, the pending active ratio is misleading and should actually be adjusted down.

5)     There’s a larger fall out of transactions due to the difficulty of first time home buyers getting their loans.

6)     Of the few remaining buyers left,  many are feeling that they will stay in their next  home longer, passing on the smaller  homes for something larger and in a more “move in” condition.

As always, I’m available if you want to talk about the market, or explore your options for buying, selling or investing in East Bay real estate. You can reach me directly at 510.333.4460.

You can download an entire copy of Glen’s East Bay Housing Numbers Through October 2011 here.

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