The sharp drop in homes for sale poses a tough choice for buyers: Jump in now  and compete with hordes of others or wait until inventory improves.

If you buy now, you might have to pay above asking. But if you wait, you  could end up paying an even higher price and a higher interest rate if you need  a loan. That’s because inventory won’t improve until prices rise enough to get  more homeowners to sell and more builders to break ground.

The inventory shortage is especially acute in California. Of the 30 largest  housing markets, the four with the biggest drops in homes listed for sale on  Zillow in February compared with February of last year were Sacramento (48  percent), Los Angeles, San Francisco (41 percent) and San Diego.

Although listings are increasing on a month-to-month basis as the busy spring  season gets under way, Trulia Chief Economist Jed  Kolko predicts they won’t start rising on a year-over-year basis for a year  or more.

clipper stThe result is stories like this:

A 1,500-square-foot home on Clipper Street  on San Mateo’s east side, advertised as a “heck of a wreck,” attracted 97 offers  in the first eight days, says listing agent Claire  Haggarty of NBT  Realty Services.

The home was listed in mid-January at $375,000, which Haggarty considered “a  little under market.” It sold for $510,000 in an all-cash deal with no  inspections, no contingencies and a 10-day close.

At some point, prices will rise enough to shake lose more inventory, but it  won’t happen immediately.

Based on what’s happening around the country, Kolko says inventory tightens  fastest in the first 12 months after prices hit a bottom. “Everybody wants to  buy at the bottom and nobody wants to sell at the bottom,” he says.

Read more: http://www.sfgate.com/business/networth/article/Home-buyers-face-dilemma-with-shortage-4342162.php#ixzz2NR36vRL5

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