I recently was asked about real estate inventory in and around the Walnut Creek, California area. It is no secret that homes for sale in our area are few and far between. Well, in a way this is good news. It shows that our market is stable and that our residents are very happy where they are. This said, when a client decides to downsize the family home and put it on the market, first time home buyers- and some repeat home buyers- are finding trouble obtaining the home for a variety of reasons, one mainly being the low inventory factor.
Right now, there are not terrible bidding wars but there are over priced offers happening on homes. Would- be home owners can’t outbid or fight as hard as seasoned home owners who know that bidding between 5 and 11 percent above the asking price will help them sweep up the home. The first time, would-be home owners are growing more and more frustrated by this factor. Think about it this way; home buyer number one has $200 to buy a condo. This is their first home and they decide to offer the full asking amount of $200k. Along comes home buyer number two, who offers $210,000 for the same condo. It’s simple math. Home buyer number two gets the home. While there may not be eighteen people bidding on the home to drive its price up way above the listing price, the competition for the limited inventory is causing discern between investors and home buyers with more purchasing power vs. first time home buyers.
Industry analysts say several years of tight inventories around the nation and rising prices in our area (thanks to the tech boom) have made the real estate market among the toughest they’ve seen for first-time home buyers! And more and more seasoned home buyers are motivated to upgrade or downsize their homes because it is easy to get a home right now, putting investors and seasoned buyers right in the same pool as first time home buyers. In fact, first-time home buyers have been brought out by rock-bottom mortgage rates, running below 4 percent for a 30-year-fixed mortgage. With the increasing competition for properties in a diverse pool, the low inventory around the nation, and in Walnut Creek, is starting out as a slow burn which probably will ignite another bidding war season soon!
The best thing to do as this challenge continues is to not get caught up in the offer process from a place of pride or vengeance. Know what you can afford and don’t take losing a house to a higher bidder personally. You want to stay within the range you can afford and stay the course- keep looking and work closely with your agent or broker to get early leads on homes that may become available.