Intero Real Estate Blog

You may have heard media stories of a so called “shadow inventory” of foreclosed homes that banks are holding off the market. According to a story in the San Francisco Chronicle, Rick Sharga, vice president of RealtyTrac, which compiles nationwide statistics on foreclosures said, “We believe there are in the neighborhood of 600,000 properties nationwide that banks have repossessed but not put on the market.” He went on to say, “California probably represents 80,000 of those homes.”
The story suggests that there will soon be a torrent of bank owned homes flooding the market. I’m not here to second guess the data reported in the Chronicle article or the data compiled by RealtyTrac, however, I continually marvel at how media stories differ from everyday life experience. In the Bay Area, the inventory of homes for sale has been decreasing for many months and at the same time the number of sales has increased as has the median price.
According to bay area sales activity, in San Mateo County, the median price is up for the seventh month in a row, the number of homes for sale is down 25% from one year ago and the number of days on the market average down to its lowest point since September of ‘08.
In Santa Clara County, the median price is up for the sixth month in a row, the number of homes for sale is down 40% from one year ago and the number of days on the market average is down to its lowest point since March.
For Alameda County, the median price is trending up since the low in March, the number of homes for sale is down 49% from one year ago and the number of days on the market is down to its lowest point in a year.
In Contra Costa County, the median price is up for the sixth month in a row, the number of homes for sale is down 51% from one year ago and the number of days on the market is at its lowest point in a year.
A basic market fundamental is supply and demand. Keep in mind that a market in balance is considered a six month supply of homes for sale. For the four counties above, the highest is San Mateo County with 2.75 month of inventory and the low is Contra Costa County with 1.75%.
Shadow inventory or not, I can confidentially report that there is every indication that what we need in the Bay Area is more inventory. Multiple offers are common and, although qualifying for a loan takes, well, qualifications, there appear to be plenty of qualified buyers eager to buy in the Bay Area.