South Orange County Blog from Bob Phillips

Falling Home Supplies Mean More Multiple-Offer Situations For Buyers

Posted in home affordability, Real estate by southorangecounty on October 29, 2009

Existing Home Supply September 2009The national housing supply fell to a 2-year low last month, according to the National Association of Realtors®.

At the current sales pace, existing home inventories would sell out in 7.8 months — 30 percent faster versus November 2008.

For a 10-month window, that’s a major housing supply reduction and it helps to explain why multiple-offer situations have been so common lately.

Moreover, the same report from NAR showed sales activity reaching its highest point since July 2007, too.

If you’re looking for evidence that the long-standing Buyers Market is ending, this month’s Existing Home Sales report might be it.

Even median sales prices — typically dragged lower by distressed and foreclosed properties — declined at its slowest pace in a year.  The market may have turned a corner.

Home prices are rooted in the basic economics of supply and demand.

  • When supply outweighs demand, home prices fall
  • When supply lags demand, home price rise

Since March 2009, the market has been moving in the right direction.  Low mortgage rates, ample housing supply and a first-time home buyer tax credit fueled buy-side demand so that home prices are now rising in many U.S. markets.

Of course we already knew all this in Orange County, California. We have been experiencing multiple offers as commonplace, in the lower price ranges, since February.

If home supplies stay on this path into 2010, expect home prices to rise even more.

Comments Off on Falling Home Supplies Mean More Multiple-Offer Situations For Buyers

%d bloggers like this: