He noted the number of San Joaquin County pending sales – meaning deals working through the escrow process – at about 1,100 exceeds the number of homes for sale.
“When that happens, that’s when properties begin to sell before they even get into the multiple listing service,” Abbott said. “It’s a really hot, hot market.”
While reported prices based on closed home sales remain flat, the strong buyer demand and limited housing inventory is causing asking prices to move up.
“If people are looking for the bottom of the market, the place they have to look from now on … is in the rearview mirror,” said Larry Underhill of Statesman Realty in Lodi.
Reasonably priced homes coming on the market are receiving multiple offers. Underhill said he’s seen as many as 23 offers on a house in Elk Grove, where the market is even stronger than in San Joaquin County.
But there are barriers to price gains, even as would-be buyers try to outbid each other for attractive properties.
Brokers reported the primary snag is the home appraisal, which is largely based on recent sale prices on comparable homes.
“We’re at that messy-in-the-middle stage, where there is a lot of upward pressure on prices, but that’s mitigated by comparable sales from just a few months back,” Underhill said of the current market cycle.
For example, he represented a buyer on a Stockton home listed at $175,000, which drew eight separate offers, and Underhill’s client boosted his bid to $185,000. Despite the multiple price offers, however, the appraiser could only justify a price of $180,000, which then becomes the most on which a bank will lend.
The dominance of distressed properties is also a drag on prices, Abbott said.
In a short sale, where the price paid is less than the mortgage balance, the seller receives no equity return. Because of that, many short-sale sellers may be willing to accept a lower price – if the buyer makes an all-cash offer instead of requiring a loan – just to speed the process.
“If you’re a short-sale seller, you just want to get the thing done,” he said.
And there are a good number of all-cash sales as investors take advantage of low home prices, Abbott said.
“If you really look at the smart money, … the investors aren’t looking to (buy and resell homes quickly); they are buying to hold, because they’re looking at prices going up over the next five years,” he said.
“Investors are really ruling the market right now.”
Another factor helping reduce inventory is a better understanding and handling of distressed-property sales by all parties involved, said Art Godi of Art Godi Realtors in Stockton.
“We’re learning to play the game better,” Godi said.
Also, home buyers and sellers are more in tune with such issues.
And lenders, too, are more likely to accept a short sale – and taking a loss on a mortgage – than force a foreclosure.
At his brokerage’s morning sales meeting last week, Godi said the discussion turned to signs of an improving market.
“We were saying there are more and more, there are buyers out there. The prices are edging up,” he said. One agent reported he had been helping a client shop homes in the $90,000 range but had seen prices on those same homes rise to $110,000 over the past two months.
Underhill said he’s seeing an interesting trend among his return clients.
“I’m working with people who had to endure the pain of a foreclosure or short sale three years ago who are now eligible to buy,” he said.
“Now, they’re coming back.”
Contact reporter Reed Fujii at (209) 546-8253 or firstname.lastname@example.org
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