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Fewer Homes on the Market causing Buyer Frenzy

Just a brief market update as I tour homes in the San Marino area!

I recently attended a open house for a new listing in San Marino at 2185 Sherwood to preview for clients (Featured in home of the week). It just came on the market and while I was at the open house, there were about 40 people in and out looking at the lovely home. I know the housing inventory was low but I was just astonished on how many other people there were just in the short time I was. When you have a home that is priced well and under 1 Million dollars, it tends to draw the most interest. Just over a week ago there were only 8 homes on the market in San Marino.

Housing inventory dropped 8.5% in December to reach 1.82 million homes available for sale. That represents a supply of just under 4½ months. Most economists consider six or seven months a healthy supply. Unsold inventory is now at its lowest level since January 2001.

Tight inventory and steep competition for homes drove the median home price up 11.5% from the same month a year earlier to hit $180,800.

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David V. January 28, 2013 at 08:22 PM
So I'm curious: why is inventory so low? Are people hanging on when they'd prefer to sell, until prices rise further? Or is there another reason? Also, when inventory (supply) picks up, won't prices fall as a result? Finally, an 11.5% increase is far more than the normal, healthy 3% annual price increase. Are we entering a new housing bubble?

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