Tuesday, May 11, 2010

Real estate's new problem: Not enough homes

By Les Christie, staff writer

May 11, 2010: 12:39 PM ET

CNNMoney.com


NEW YORK (CNNMoney.com) -- Can it be possible? Despite the housing bust and high foreclosure rates, in some areas real estate agents are complaining that they don't have enough homes to sell.

There is currently an eight-month supply of homes on the market -- meaning that, at the current sales pace, it would take eight months to run through the backlog.

That's still a lot compared to the six-month supply that is expected in a normal market, but it is much better than it was. In March, there were nearly 2% fewer homes on the market than there were a year ago, and 21.7% fewer than the record of 4.6 million in July 2008.

In some areas, supplies are even bidding-war tight. In Denver, for example, supply has fallen to 5.7 months from 6.2. In Phoenix it has declined to 4.5 from 5.2; and in San Francisco inventory has halved, to 3.2 months from 6.5 last March.

In California, almost all cities have a short supply of single-family homes. That's especially true in the lower-priced categories, according to Leslie Appleton-Young, chief economist for the California Association of Realtors.

The supply of homes that sell for less than $300,000 is at 3.2 months statewide, down from an already low 3.3 month supply 12 months ago.

Inventory of moderately priced homes, those between $300,000 and 500,000, fell to 4.2 months in March, down from 4.5 months in March 2009.

There are plenty of more expensive homes in California, but this inventory is going quick: inventory for million-dollar-plus homes has dropped from 21.6 months to 10.9 months.