Homes for Sale Grow Scarce as Sellers Await Higher Prices

by 15 May 2012

(Yahoo Finance) -- A real estate agent near California's Silicon Valley seeks sellers by combing property records for people who've owned their houses for at least 40 years. A Denver-area broker offers half his commission for a listing, while a counterpart in South Florida hosts happy hour gatherings at bars to loosen up homeowners reluctant to sell.

Real estate agents, who spent the six-year U.S. housing collapse coaxing buyers off the fence, are now hunting for sellers as home inventories hover near lows last seen in 2005. A scarcity of properties signals the housing market's uneven recovery as purchasers trying to take advantage of record affordability run up against homeowners choosing to stay put in properties that aren't worth as much as they owe.

"It's a sign of transition from a slow slide down to what hopefully will be a solidly improving market," Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School, said in a telephone interview. "We're not going to have a healthy market until we can have move-up buyers purchase homes and not simply stay in place."

The number of homes listed for sale in the U.S. fell 22 percent to 2.37 million in March from a year earlier, according to the National Association of Realtors. That's a 6.3-month supply at the current sales pace, which is considered by the association to be a balance between buyers and sellers. In April, inventories fell to less than a three-month supply in markets including San Francisco, Silicon Valley, Denver, Phoenix, San Diego, Los Angeles, northern Virginia and Seattle, according to online brokerage Redfin.

‘Lack of Sellers'

"The places where the market is most competitive -- like Washington, D.C., Phoenix and San Francisco -- are where sales volume is actually declining," Redfin Chief Executive Officer Glenn Kelman said in a telephone interview from Seattle, where his company's based. "The limiting factor on sales volume isn't a lack of buyers. It's a lack of sellers."

Silicon Valley homes were on the market for a median 49 days in April, down 29 percent from a year earlier, according to Altos Research LLC. That compares with a median 107 days in 30 metropolitan areas tracked by the Mountain View, California-based real estate data company.

Phyllis McArthur, a Realtor in San Mateo, California, sent letters to 18 homeowners who bought their properties more than four decades ago, asking if they were willing to sell to families who want to put their children in the school system.

"I got a call back from one gentleman who said, ‘They'll have to carry me out feet first,'" McArthur said. "I said to him, jokingly, ‘When you feel yourself slipping away, will you call me?'"

Record Affordability

A housing affordability index that's based on a combination of resale prices, household income and mortgage rates reached an all-time high in the first quarter, the National Association of Realtors reported today. The index shows that a family with the median income of almost $61,000 could afford a $325,500 house, which is more than double the median existing single-family home price of $158,100 in the U.S.


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