Competition has continued to rise for a shrinking supply of homes on sale in Glendale, Burbank and La Crescenta, as most potential sellers continue to decide against putting their properties on the market, real estate agents say.
Although area market conditions are ripe for buyers, with interest rates around 5% for most mid-range home loans, many property owners have delayed sales because of steep drops in prices brought about by economic uncertainty, agents say.
Residents who may have planned to retire and sell their homes prior to the recession have instead backed away from those plans, while others, interested in moving on to larger homes have been stifled by a lack of available property, said Keith Sorem, a Glendale-based agent for Keller Williams Real Estate.
“I think that, were it not for the economy, the market would really take off, but because the economy is so weak it kind of ripples everywhere,” Sorem said.
Economic concerns are weighing heavily on homeowners who opt not to sell their properties, said Robert Bridges, associate professor of real estate finance at the USC Marshall School of Business.
The federal government is heavily burdened with debt, causing uncertainty about the strength of the dollar and raising questions about planning major transactions, Bridges said.
Experts are also concerned that a second wave of mortgage defaults could be on the horizon, potentially further burdening the already troubled lending system, he said.
“Its just a real mixed picture right now,” he said.
Strong competition among home buyers, however, does signal that prices could improve, but the short supply of available homes should not be taken for granted, he said.
“The picture doesn’t seem to be clear that we’re headed to the upside and the fact that you have limited inventory should not lead anyone to the conclusion that markets are firming,” he said.
A total of 153 homes were listed for sale in Burbank at the start of the month, down from 232 last year. In Glendale, there were 211 listings, down from 345 a year ago, according to the Multiple Listing Service.
Combined with strong demand, particularly for homes around $500,000 and under, the supply of available property is enough to meet only two to three months of demand in the area, Sorem said. The regional markets are balanced when they have about six months of inventory.
“There’s a lot of competition for fewer homes,” said Kendyl Young, an agent for Coldwell Banker in Glendale. “Everything that I have has multiple offers, so that is a lot of activity.”
Demand for homes will likely continue to rise over the next month, said Brad Korb, an agent for RE/MAX In Action in Burbank.
An $8,000 federal tax incentive for first-time home buyers will be available until Nov. 30, he said.
“It’s a phenomenal time for home buyers,” he said.
But for the market to become balanced enough to meet the buyer demand, confidence in the economy will have to improve, which may not happen in the short-term, Sorem said.