There are currently more buyers looking for homes than homes for sale. El Dorado County only has about 425 current active residential listings. A few years ago, it was not unusual for that many homes to be listed in a single month. During the last two months only 200 new listing came on the market. Without a significant increase in inventory, sales will decrease significantly. We just don’t have much to sell in any particular price range. This shortage of homes for sale is happening all over our region.
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According to Pat Shea, president of Lyon Real Estate, available resale inventory in the greater Sacramento region fell to the lowest level in a decade with only a 1.2 month supply based upon the current rate of sales.
Looking back, during 2012, we transitioned from a buyer’s market during the first quarter to a balanced market during the second and third quarters and metamorphosed into a seller’s market during the fourth quarter.
The shortage of inventory prompted real estate tracker Zillow to predict that our region would see another 10 to 14 percent increase in property values this year. That tracks with what’s happening in El Dorado County, where the median selling price of a county home in January 2012 was $250,000 and so far this year the median selling price is slightly above $275,000.That’s an 11 percent year-over-year jump.
There are several reasons for our shortage of inventory. Although prices are rising, many homeowners still remain underwater, owing more on their home than its current market value. They can’t sell if they wanted to. Foreclosures and short sales that accounted for hundreds of listings a few months ago now total around 75 and will likely drop lower. According to foreclosure tracker RealtyTrac, Notices of Default, issued by lenders to borrowers who are 90 days delinquent on their mortgage payments, has dropped by two-thirds this year over last. And where is all that scary “shadow inventory?”
According to Daren Blomquist, RealtyTrac vice president, “With California’s more streamlined foreclosure (non-recourse) process we don’t have a big backlog of properties.”
Historically, when the re-sale listing inventory is low, builders are frantically working to keep up with the new increased demand. That’s not happening this time around in our county. Of the 2,482 new homes sold last year in Sacramento, Placer and El Dorado counties, only 135 were built and sold in our county. The county’s past aversion to any new residential developments and voter-approved Measure Y has ensured that new home construction in our county will be kept to a minimum. What is available will be expensive. According to the Gregory Group, the average price of a new home sold in El Dorado County during the fourth quarter of last year was $464,165. That’s $122,000 higher than a similar home in Placer County and 37 percent higher than our six-county regional average.
A Sunday drive around the county looking at new homes and communities will be brief. There are only a few new homes currently available in the new community of Blackstone, located south of Highway 50 and east of Latrobe. A few more new homes are in Serrano but all totaled less than 10, most with delivery completion dates in late spring.
The scarce inventory of new and re-sale homes is frustrating for want-to-be county homebuyers. When a buyer is fortunate to find a suitable property, it’s likely that other buyers are already there. The California Association of Realtors reports that 70 percent of all listings receive multiple offers. Imagine the disappointment, after searching for weeks for a suitable home, finding a match, only to discover that there are already other offers.
Locating a suitable home is further complicated by a few agents’ inaccurate classification of the status of their listings. Traditionally, a property listed in the MLS is an “active” listing, seeking offers or, when an offer has been accepted by the seller, its status should be immediately changed to a “pending” sale. Both buyers and their agents focus their search efforts on “active” listings. When an agent purposely delays changing the status of their listings from “active” to “pending” prospective buyers arrive, only to discover the property already has an accepted offer. Often the seller is seeking back up offers or an offer has already been accepted but it has a contingency, and the seller and the listing agent are attempting to improve their position with a non-contingent offer.
Another obstacle that buyers are more frequently encountering is the active but “unavailable for showing” listings. Here’s an example. These showing instructions appear in a current listing: “No lock box and only opportunity (to show) will be open house on Saturday between 2 and 4 p.m. Buyer must qualify first with seller’s preferred lender.” Other listings are “tenant occupied” have “restricted hours” for showing or have other hoops that a buyer must jump through just to get inside a property.
Many qualified buyers, after missing out several times on a suitable home, have simply given up. Others are looking at homes in Sacramento or Placer counties where prices and selection is more attractive. Finding an acceptable home in El Dorado County is becoming an arduous task requiring the patience of Job, the sleuthing skills of Sherlock Holmes and the determination of a freight train. Finding one, however, is also a rewarding experience.
Ken Calhoon is a broker in El Dorado County. He can be reached through his Website at kencalhoon.com.