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Jim Klinge
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Posted by on Apr 17, 2012 in Inventory | 7 comments | Print Print

Dearth of Inventory

From the

The Bay Area is seeing more improvement than other markets nationwide, but its lack of inventory is a problem, according to Rick Turley, president of Coldwell Banker Residential Brokerage for the San Francisco Bay Area. Turley recently told Silicon Valley agents they need to educate their clients about the real story behind their local markets.

“We have a dearth of listings everywhere. Inventory is the lowest it’s been in four to five years in every county,” Turley told members of the Silicon Valley Association of Realtors.

Turley said the market is heating up but hampered by very low inventory, which have resulted in numerous multiple offers. Places like San Francisco have a mere three months supply of inventory. A healthy market has at least four to six months supply of inventory, said Turley.

“Inventory is what is going to put a cap on what we do this year,” said Turley.



How about the detached inventory San Diego?  These are the number of active and sold listings – according to this graph, San Diego has less than a month’s supply of houses for sale:

Put the median prices aside, the real story is how the inventory has dried up.  The next phase of psycho-babble in the media will be how sales are dropping, but it will be because buyers are sidelined due to the lack of houses to purchase.  This year’s data will be more perplexing than ever for the media types desperate for a quick sound-bite!



  1. Seems like there’s a bug in Redfin’s graph because in the details below it says 1765 Homes For Sale and 781 Homes Sold. That still puts inventory at a really low 2.5 months.


  2. So what is the theory behind the dried up inventory?

    –the foreclosure pipeline finally drying up
    –short sales tying up most of the distressed properties
    –homeowners are avoiding listings due to the low median price
    –ability to refi to historic low interest rates allowing homeowners to stay put
    –inability to obtain profit at sales is preventing move ups

    All of the above?


  3. In the Coastal Corridor, I have observed that typical owner (potential seller) has gone into hibernation. They dont have a NEED to sell and wont sell at a lower price. Most of them already have the better locations and lots (that we all wish to buy at much discounted price). I have even knocked on couple of doors (Great Ocean View Lots) where they listed the house for sale in 2009-2010 and then withdrawn. Upon enquiry, I was told that its for sale but ONLY AT THEIR ASKING PRICE and not what I think should be the fair market value. Ofcourse … if I want, I can rent it from them for around $5000+ per month. In the end they dont mind living there because its a great location/lot and they DONT HAVE a NEED to sell.
    Potential Buyers for above market segment are more likly to loose, as sellers dont have a NEED to lower the asking price. Opportunity Cost for buyer to wait for even 1 year is huge ($4000 x 12 = almost $50k in annual rent).


  4. 1.Seems like there’s a bug in Redfin’s graph

    They have always played fast and loose with the facts, so no surprise. I had checked their explanations linked on the website, and it wasn’t perfectly clear.

    But I think the discrepancy is due to the graph showing weekly totals, and the chart showing monthly. From their link:

    Our graph is updated once a week and each point represents one week’s worth of data.

    # For Sale: the number of homes that were for sale in the week ending on the date shown on the graph.
    # Sold: the 90-day moving count of the number of homes sold.

    Then further down it explains….

    We show you data on what’s been selling, broken out by single family homes, condos or both in the relevant time period. This data is updated once a month near the beginning of the month. The number of sales and pricing reported in a given month may change the next month to account for any sales recorded in the previous month after we publish our report. We get our sold data from the MLS and public records.

    Here’s how we calculate statistics about homes sold:

    # Homes Sold : the number of homes sold in the given time period.
    Median Sold Price : the median selling price for the type of home that sold in the given time period.
    Median Sold $/Sq. Ft. : the median of the ratio of selling price to square footage for homes of a certain type sold in the given time period. It is the median of the ratios, not the ratio of two medians.


  5. Yeah I checked their explanations for the numbers too and it wasn’t clear. I think you’re right about 90 day number for solds that would make some sense 3*781 ~ 2300 and they are showing about 2100. Maybe they don’t intend for people to use the graph that way but it just immediately looks wrong.

    We’re probably at 2-3 months of inventory in most parts of the county now and it kind of looks a lot like it did in summer 2010. That period might have been driven by the tax credit deadlines, this seems to be more of a sellers strike. I remember seeing something like < 2 months in an average middle class neighborhood like 92126.


  6. I think I have seen the scales on two-line graphs be messed up.

    If you plot each line by itself, it looks right, but when you add the second line and second scale, it was different. Same shape, different values.


  7. I figured that there were technical issues with their graphics, but because they are the only ones doing the talking, they are the authority.

    How many people in the market are relying on the ‘fin data, but don’t take the time to understand it, or verify? My guess is that it’s the vast majority.



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