The U.S. housing recovery is uneven. Some markets are now booming while others are still sputtering. The biggest changes are happening along the West Coast and in the Southwestern United States. In these markets, housing conditions are now favoring sellers over buyers.
A combination of low inventory and growing demand has put sellers in the driver’s seat. Home buyers, on the other hand, will face stiff competition, and things will only get tougher for them as we enter the summer months.
Why buyers will find fewer homes this summer
Here are seven housing markets where buyers have their work cut out for them:
1. Orange County, CA
Collectively, this metro area ranks #1 in terms of inventory reduction, out of 146 metro areas tracked by Realtor.com. The total number of homes listed for sale in Orange County has declined by 52%, over the last year or so. The median list price rose by 32% during the same time frame. It’s a good time to be a seller in this real estate market.
2. Oakland, CA
A friend of mine is moving his family from Oakland to the Wine Country region of California. He asked if I had any tips for selling his home. I told him to list it on the MLS and wait for the offers to pour in. That’s the kind of housing market we are seeing in Oakland right now.
This city has the lowest median age of inventory out of 146 U.S. metro areas. According to Realtor.com, Oakland’s median age of inventory is just 15 days — well below the national average. There have been reports of homes generating multiple offers within a day of listing.
Properties are selling quickly in this market, and with good reason. The number of homes listed for sale has dropped by nearly 50% over the last year. Talk about shrinkage. This is clearly one of the best housing markets to sell a home right now.
3. San Jose, CA
Real estate prices are rising fast in the San Jose housing market. You might call it the Silicon Valley effect. Salaries are well above average in this part of the country, and that fuels housing demand.
“There’s a lot of cash in the Valley,” said Carl San Miguel, president of the Santa Clara County Association of Realtors. “About 10% of offers are all cash, and most of the others are big down payments, 40% to 60% cash.”
According to Realtor.com, property listings in San Jose have declined by 45% over the last 12 months.
4. Los Angeles, CA
The Los Angeles metro-area housing market has experienced a 45% drop in for-sale listings. (You may have noticed the California pattern.) The median list price for homes in this market rose by 34% over the last year or so.
According to the Case-Shiller Home Price Index, average house values in this market have risen by a healthy 14.1% year over year, when measured in February. The median price paid for homes in Los Angeles climbed 27% over the last year, to land at $395,000.
5. Seattle-Bellevue-Everett, WA
According to MLS data from the Northwest Multiple Listing Service, King County, Washington has only a 1.09 month supply of housing inventory. That’s well below normal, and it’s a primary reason why list prices have shot up by 19% over the last year.
Multiple offers are becoming the new normal in this housing market, as in the other markets on the list. Wealthy Chinese buyers are investing heavily in this area, as well.
6. San Diego, CA
According to San Diego-based DataQuick, Southern California just had its busiest April since 2006, in terms of home sales. In April, sales rose 10% compared to the same month last year. The Case-Shiller index for San Diego shows a 10.2% year-over-year increase in home prices. Inventory in this metro area has declined by 35% over the last 12 months, according to Realtor.com.
Another positive trend: According to RealtyTrac, San Diego’s foreclosure rate recently fell to its lowest level since 2006. Default notices were down as well. Over time, this will reduce the number of distressed (low-priced) homes on the market.
7. Denver, CO
Denver is not a recovering “bubble city,” like the California cities on this list. Prices here have been much more stable over the years. But it’s still one of the best housing markets for sellers right now, as a result of significant inventory decline. According to Realtor.com, the total number of listings has dropped 34% in the last year.
“The active listing level is the lowest since 1998,” said Michael Welk of the Colorado Association of Realtors.
Home buyers in these housing markets will need the three P’s — patience, persistence and preparation. Multiple offers are common in these areas. Bidding wars have been reported in several of them. Inventory is low and the competition is fierce. But all is not lost. Here are seven tips for finding a home in a shrinking market.