Not long ago we were worried about shadow inventory , the prospect of a large amount of foreclosure homes coming to market at the same time . But the real problem right now continues to be shrinking inventory of homes for sale – especially those at the lower price spectrum , which tend to be the ones commonly sought by firsttime buyers .
 According to

Zillow , the inventory of lower-priced

The state had the

biggest reduction in homes for sale across all three price tiers , with lower-priced homes in Fresno ( -59.7%), Sacramento ( -55.4%), San Francisco ( -53.2%) and Modesto ( -50.5%) seeing the largest reductions .


At the national level , there were 15.3 % fewer homes for sale in the bottom price tier over the last year .
 
 Like a delicate rain forest ecosystem in which each life form contributes to the whole , first-time buyers play a key role in the housing market , which is why we need to pay attention to the problem .
 Zillow notes that many more investors are in the market right now , gobbling up properties in the

bottom price tier and often with cash , which makes them more competitive than a typical first-time buyer .
 


Another factor contributing to shrinking inventory is underwater owners – those who now owe more on their mortgage than their homes are worth . Being underwater limits an owner ’ s ability to sell , which can keep more inventory off the market .
 Take all of these circumstances and layer on the fact that builders have put fewer new homes on the market these past five years . The recipe is not great for first-time buyers .
 However , a lot of positives still exist in supply constrained markets . The biggest thing first-time buyers have going for them right now is cheap financing ( interest rates for mortgages amazingly are still at some of the lowest levels in history ).

Also , prices are still very affordable in many markets for first-time buyers .
 Because of these factors , I don ’ t think we ’ ll see a dropoff in demand anytime soon . It ’ s just going to take longer for buyers to find that first dream home .
 In times like this , the services of an exceptional agent will also help in the search . When tight inventory is a market reality , it means you have to be armed with as much pricing information as you can possibly gather in order to place the most competitive offer . And you need to move fast when you find a house you like .
 


Another thing that can really help first-time buyers compete in supply constrained markets is getting pre-approved for a loan , not just ‘ pre-qualified ’. This makes the offer process much faster and helps to show sellers that yours is a viable offer that will pull through .
 It ’ s never been more important for buyers to start the process fully prepared .

By Gino Blefari , President / CEO , Intero Real Estate Services , Inc .

By Marta Dinsmore , Realtor Intero Real Estate Services www . MartaDinsmore . com 408.840.7420

Marta is the recipient of top honors at the Intero Real Estate Services Annual Achievement Awards : Top Selling , Listing & Top Producing Agent for 2011 Gilroy Intero Office – putting her in the top 3 % of all Intero Real Estate Services nationwide .

Local Trends Single Family Residential in Gilroy

May 2012 thru July 2012 August 2012 thru October 2012

W I N T E R / H O L I D A Y 2 0 1 2 G I L R O Y T O D A Y 7