September MLS Numbers Confirm Dwindling Housing Inventory

Westcoe Realtors, Riverside California…The latest housing statistics as of today from the local MLS service for Riverside continue to show the decline in available inventory for anyone wishing to purchase a home in today’s very affordable real estate market.  The current foreclosure moratorium mandated by the State of California, which expires in approximately 2 weeks, has created havoc for potential buyers by severely limiting the amount of homes available on the market.

According the the MLS data for today, September 1, there are 1,056 properties listed for sale in the Riverside area, which continues a downward trend from January, when the available inventory was at 2,385 properties available.  As various Federal and State moratoriums have take effect, the housing availability numbers have fallen every month since January’s high…and while the intent was to create stability in our housing markets and assist troubled home owners with various modification programs, the result has been anything but ideal for both buyers and home owners.

For existing home owners, the modification programs decried by the government have been assailed as an abject failure by both the real estate community and home owners themselves.  Rampant bureaucracy and massive time delays have pretty much derailed any success from the loan modification programs, and banks have simply lost more money by being forced to delay any type of foreclosure activity until said moratoriums are no longer in effect.  As an example, for the month of July, there were approximately 4,000 Notices of Default (NOD) filed in Riverside.  An NOD is the first step a lender must take to begin the foreclosure process, and a filing of approximately 4,000 certainly does not indicate any sort of successful loan modification process.  Home owners are frustrated, banks are frustrated, and the process is simply a mess.

For buyers, this entire scenario has only served to arbitrarily limit the amount of homes currently available on the market to purchase.  Statistics such as the NOD filings referenced above serve notice that the inventory will be available at some point in the future, but for now, the massive number of buyers must fight each other for what little inventory is available.  This has lead to a huge increase in multiple offers for each home, over bidding in prices, appraisal issues to keep up with the price surge, and a complete clog in the system.   All this while buyers are trying to close escrow by November 30, 2009 in order to get the $8,000 tax credit promised by the Federal Government.

The irony here is that while the government’s stated mission is to help sellers and buyers in the potential recovery of the housing market, in the end, the very systems put in place for this are actually hurting everybody in the process.  The frustrations felt by all are as palatable as the ash and smoke in the air from our current Southern California fires…and making people choke just as much.

Also, there is no time table for when this huge number of foreclosure homes will be available for sale.  Much like an accident on the freeway clogs the  lanes long after the cars are removed, it is the same for the foreclosures.  An interruption on the magnitude of the California moratorium (90 days ending mid September) will affect the flow of available inventory for many months to follow.

In the end, in most cases, the only thing all this housing legislation has truly done is to prolong the inevitable.  You can play with all the numbers you want, but simple real estate economics dictate that until banks get out of the home ownership business and stop foreclosing on homes, our housing market will not rebound like the government (and the rest of us) wants…and delaying the foreclosures only delays the recovery.  The dye has been cast, and we must deal with the issues instead of just stalling them for some future time period.  Until then, we will continue to see the numbers like those above, and the resulting continuation of the housing market we are all trying to get away from.