Low Inventory, Higher Prices

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Could low housing inventory replace Location, Location, Location as the primary factor determining home values?

Buying a home today is analogous to enrolling a child in private kindergarten. The enrollment process involves visiting 4-5 area schools, paying an application fee and then waiting to see if your application has been accepted. To help eliminate the odds, you do this several times, hoping that one of the schools will accept your child for Fall enrollment. As you go from school to school, you begin to see the same people vying for those available few spots.

Buying a house today is much the same. A new listing hits the market, the agent holds an open house with a specific deadline to submit an offer. All of the offers are submitted, the better offers receive a counter and then one buyer is chosen. As you move from open house to open house, you begin to see the same prospective home buyers all previewing the same properties.

Another Sellers Market

If you are attempting to buy a house, you are well aware of the issues and obstacles you face. You know how tough it is. If you haven’t been following Pasadena Real Estate, you are more than likely unaware that we are in another sellers’ bull market. It pretty much appeared overnight.

Homes are selling within the first week, with multiple offers over asking price. There is a lot of cash out there all waiting to be invested. The market is advancing so fast that values are moving ahead of appraisals and creating problems for buyers with high loan to value ratios.

This market is anything but predictable, most never thought it would fall to the degree it did, let alone rise like a Phoenix so quickly. Predicting prices has become a moving target.

The house used in this post just closed escrow on April 1. Listed for $399,000 it sold for $525,000. Lots of character and charm in its 1153 square feet with 2 beds & 1 bath. However it sits right on the corner of the 210 freeway access road. This selling price is more characteristic of a home surrounded by other houses away from the busy intersection, speeding cars and emergency vehicles.

But then again, this market is unpredictable.