Home buyers are left with fewer options on the market than they’ve seen in decades due to the inventory squeeze. That’s bad news for buyers of course, but the extremely high demand for available properties means it’s never been a better time to be a seller.
"I've been selling real estate for 25 years, and this is the strongest seller's market I have ever seen in my entire real estate career," David Fogg, a sales associate with Keller Williams Realty World Media Center in Burbank, Calif., told CNBC.
"A lot of our sellers are optimistically pricing their homes in today's market, and I have to say, in most cases, we're getting the home sold anyway."
Fogg explained that one of his recent listings, a three-bedroom, two-bath entry-level home in Burbank encompassing 1,240 square feet, just sold for $789,000. The property received three offers even before Fogg held an open house event, which saw 100 would-be buyers attend.
While Fogg was no doubt happy to make the sale, buyers in the area are left struggling to find a suitable home within their price range.
“ It's very tough,” said Jilbert Mosessian, a Burbank resident who is currently renting while trying to find a home to buy. “Most of the listings are intentionally listed a little low to get a lot of attention, and it's not uncommon to get 12 to 16 offers on one property.”
Mosessian told CNBC that he recently put in three offers on three different properties that were “well above the listing prices”, but still didn’t have any luck. He later found out that five people had put in higher offers, and the seller therefore didn’t want to deal with him.
The National Association of REALTORS said in March that the available inventory of homes nationwide had decreased by 6.6 percent from one year ago. Current unsold housing inventory stands at just 3.8 months’ supply, which is substantially less than the five to six month supply most experts deem necessary for a healthy market. Another stat shows that 48 percent of homes were sold in under a month in March.
Some buyers are stepping up their game, dropping contingencies and offering more cash as a down payment in order to get noticed. In addition, some real estate agents warn that buyers should be aware of potential appraisal issues, as many homes will be valued at below the bid up sale price.
"I'm talking to the buyers in advance about these problems so that we address the appraisal issues before we go to escrow, and nobody is surprised in three weeks when we get an appraisal that's on the lower side," Fogg said.