The Bay Area is seeing more improvement than other markets nationwide, but its lack of inventory is a problem, according to Rick Turley, president of Coldwell Banker Residential Brokerage for the San Francisco Bay Area. Turley recently told Silicon Valley agents they need to educate their clients about the real story behind their local markets.
“We have a dearth of listings everywhere. Inventory is the lowest it’s been in four to five years in every county,” Turley told members of the Silicon Valley Association of Realtors.
Turley said the market is heating up but hampered by very low inventory, which have resulted in numerous multiple offers. Places like San Francisco have a mere three months supply of inventory. A healthy market has at least four to six months supply of inventory, said Turley.
“Inventory is what is going to put a cap on what we do this year,” said Turley.
Turley also observed that the Facebook factor and improved employment picture in Silicon Valley has led to a shift in buying patterns of San Francisco’s younger buyers, who now prefer properties in the Mission District, Potrero Hill areas, places that are closer to their employers in the valley.
The lack of inventory in the Bay Area has much to do with confusion among consumers, according to Turley. He suggested more one-on-one conversations with clients to let them know that while it is a good time to buy a home, it is also a good time
to sell a home. With the low inventory and growing demand, Turley noted “sellers have an advantage not just in price, but in terms that can be favorable to them.” Some buyers are proposing free rent-backs, waiving contingencies and are even willing to purchase homes as is, he said.
Turley’s remarks echo those of the California Association of Realtors, which has indicated home buyers in most of California’s markets are experiencing multiple offers, even for distressed and foreclosed properties. According to the state group’s data, sales of bank-owned homes are closing in an average of less than 60 days, and often above the list price, without government intervention.
The California Association of Realtors is opposed to the implementation of bulk REO sales in California due to the extremely low inventory and high demand for homes in the state. The group last week applauded California congressional mem- bers who wrote a letter urging the Federal Housing Finance Agency to refrain from implementing its “REO Initiative” pilot program in the state. The letter written to FHFA acting director Edward J. DeMarco by U.S. Rep. Gary Miller (R-Brea), along with 18 other members of California’s congressional delegation, stated the REO Initiative pilot program in California would negatively affect California’s housing market and raise costs for taxpayers. The program calls for the sale of more than 600 Fannie Mae-owned foreclosed homes in Los Angeles and Riverside counties to institutional investors.
Realtor officials at the national level have likewise registered their concern with the government’s use of real estate owned bulk sales at a time when investors are already absorbing much of the nation’s housing inventory. The latest National Association of Realtors report on second homes indicates investment home purchases represented nearly one-third of all existing-home sales last year. The national group says instead of REO bulk sales, more must be done to expand the availability of financing for qualified home buyers and investors to help draw down REO inventory nationwide.
Information in this column is presented by the Mercury News, Silicon Valley edition