Falling foreclosures keep national housing supply tight

Source: Housingwire
By Megan Hopkins

National housing inventory remains at a traditional low, leading to healthy demand and pushing prices higher. And there is good reason for it: fewer foreclosures on the market prevent a bottoming out. The number of homes listed as for sale on Zillow dropped 16.6% year-over-year in February, according to the real estate marketplace website. It's a trend noticed by foreclosure data company RealtyTrac which notes big drops in available inventory based on plummeting foreclosure numbers in markets like California, Las Vegas and Phoenix. With inventories already lower than normal for this time of year, this drop in available listings only adds to the inventory crunch as markets head into the busy spring selling season. “The supply of for-sale listings continues to dry up, driven in part by potential sellers trapped in negative equity and homeowners that won’t sell out of fear they won’t be able to find a suitable home to buy later,” said Zillow ($49.64 -0.497%) Chief Economist Stan Humphries. Zillow broke down the year-over-year change for metros and revealed that almost two-thirds of the areas surveyed reported a smaller year-over-year decline in for-sale homes in February than in January. Drilling even deeper into the breakdown, California seemed to dominate the list with the biggest change in homes for sale on Zillow. In fact, four of the top five metros in the inventory contraction are located in California. Sacramento saw a 48% drop, Los Angeles reported a 45.7% decline, San Francisco inventory dropped 40.9% and San Diego fell 39.4%. According to Daren Blomquist, vice president of RealtyTrac, one of the major reasons for the big drops in available inventory is the plummeting foreclosure numbers in markets like California, Las Vegas and Phoenix. Data from RealtyTrac reveals that from January 2012 to January 2013, foreclosure inventory dropped 56% in Los Angeles, 50% in San Francisco, 55% in Riverside-San Bernardino and 73% in San Diego. “Given that foreclosures accounted for 30% to 50% of sales in those markets, the drop in foreclosures for sale is having a significant impact on overall inventory,” noted Blomquist. But Blomquist points out that many markets are beginning to see a change in unlisted foreclosures, indicating there will likely be a rebound in available inventory in the coming months as those foreclosure properties are listed as short sales or bank-owned homes for sale. Humphries also seems upbeat that inventory will continue to grow in the next few months. “As home values rise, some homeowners will be freed from negative equity and able to list their homes, which will contribute to an easing of the inventory crunch. While this inventory is coming, it may still be a frustrating spring for buyers vying for what inventory is available. It’s important to be patient and not commit to paying beyond one’s comfort level in the heat of negotiations,” said Humphries.

URL to original article: http://www.housingwire.com/news/2013/03/07/falling-foreclosures-keep-national-housing-supply-tight

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