GLENDALE — Frustration is mounting among home shoppers trying to take advantage of historic drops in prices as the supply of real estate for sale in Glendale and Burbank dwindles, experts and agents say.
The local home market has decreased dramatically over the last year, with the amount of properties listed for sale in June falling by 43% in Glendale and by 66% in Burbank from their marks in 2008, according to the Multiple Listing Service.
At the same time, home prices have dropped, in many cases by more than $100,000 during the last year, experts said.
While the drop in prices has prompted a surge of aggressive shopping for mid-priced homes, buyers are having little luck in securing adequate financing and winning crowded bidding wars caused by the shortage of property on sale, said Keith Sorem, a Glendale-based agent for Keller Williams Real Estate.
“They’re frustrated because there’s nothing to buy,” Sorem said of shoppers in the strained market.
Despite increasing demand, the climate for home sales may not change soon because of continuing market uncertainty, said Robert Bridges, associate professor of real estate finance at the USC Marshall School of Business.
Concerns about rising unemployment rates, California’s financial crisis and the lingering effects of the nationwide mortgage meltdown have prompted banks to employ increasingly conservative lending practices, Bridges said.
And many homeowners have opted to hold on to their property, rather than trying to sell during a bumpy recession that had experts predicting price rebounds just two months ago, he said.
“There are just a lot of wild cards out there that make economic conditions uncertain at this point,” he said.
With homeowners delaying sales, buyers have found themselves in increasingly tight competition for a shrinking supply of property, and are often handicapped by lenders, said Dan Soderstrom, a Burbank-based agent for GMAC Real Estate.
Banks are hesitant to offer large loans, and appraisers often value properties below prices agreed to between buyers and sellers after shoppers compete to drive up costs, Soderstrom said.
When banks offer loans below agreed-upon prices, buyers are forced to either make up the difference with cash, or give up the property altogether, he said.
At that point, shoppers have to ask themselves, “How bad do you want it?” Soderstrom said.
Low appraisal values have largely been caused by new guidelines meant to curb risky lending practices that have been blamed for many of the country’s recessionary problems, said Leslie Appleton-Young, chief economist for the California Assn. of Realtors.
But the Home Valuation Code of Conduct, adopted by the Federal Housing Finance Agency in December, requires lenders to contract third-party appraisers that could be unfamiliar with neighborhoods and potentially undervalue homes, leaving shoppers with smaller loans than they need to match high asking prices, she said.
“It’s had a dramatic effect on the speed of transactions,” she said. “There’s just been a lot of problems because there seems to be an increased utilization of out-of-area appraisers.”
The association is working with the National Assn. of Realtors to push legislation that would place a moratorium on stricter valuation rules, despite the agency’s aim to clean up and prevent risky lending activity, she said.
ZAIN SHAUK covers education. He may be reached at (818) 637-3238 or by e-mail at email@example.com.