New MLS Inventory Stats Confirm Inventory Reduction

Westcoe Realtors, Riverside California…According to the Riverside area MLS stats for today, July 1, 2009, the amount of houses for sale in the Riverside area has shrunk again, to a new low of 1,184 properties for sale as of today.  Compared to the available inventory 30 days ago (June 1…1,332 homes for sale), this is a drop of 11% for the past month, and a drop from January 1, 2009 of approximately 50%.

The actual numbers of available homes for sale since January, 2009 is as follows:

January 1            2385                    May 1          1646

February 1          2238                    June 1         1332

March 1               2106                    July 1          1184

April 1                 1883

In “normal” real estate markets (we are unsure how to really define a normal market these days), this reduction in supply would mean a possible upturn in housing prices, since the demand for housing from buyers is through the roof at this point in time.  These fewer properties for sale has led to an even more frenzied buying process, where 20-30 offers on bank repo properties are the norm, not the exception.  However, there are two artificially induced programs (there goes the government again) that are keeping this market from reacting an any sort of normal fashion.

First, the availability of repo homes is being held down by current government moratoriums.  There are literally thousands of foreclosure homes that are waiting to work their way through the system…and as ugly as that sounds, our housing market cannot improve until all these foreclosures are purchased by ready, willing and able buyers.  We’ve got the buyers, but the repos are stacked and packed like airplanes in a holding pattern, just waiting for the moratorium to be lifted.  So, as insane as it sounds, the solution (buyers buying these repos) is not happening because the government is not letting the repos come to market.  Eventually the moratorium will be lifted (mid September, 2009), and then we will begin to get them all sold…but for now, we just sit, wait, and shake our heads at the insanity of it all.

Secondly, the appraisal process is also limiting the rise in home prices.  As we have chronicled in this blog before, the regulations imposed on appraisals as a result of the housing crash is Byzantine as best.  Appraisers didn’t cause the run-up in prices before, but you’d never know it from the regulations now in effect.  Let’s just put it this way….it defies the elemental rules of supply and demand when you have so many people who want so few houses, are willing to pay more for the house than the list price, but are being told “no, we want you to pay less” by the appraisal process.  Insane….yes.  But it’s what we’ve got for now.

In the meantime, we will just do the best we can with dwindling supply numbers as the ones indicated here in our July 1 statistics.

Take care, and let us know if you have any questions or issues you would like to see addressed in this blog.