Lenders only lend on the appraised value of a home …not the agreed sales price.
Although “closed sales” are establishing higher prices throughout OC, asking prices are simply out racing “appraisal values”.
With a shortage of affordable priced listings, this condition will only worsen.
Orange County had just 3,753 homes for sale as of Thursday, the smallest number on the market in the eight years that Steve Thomas of ReportsOnHousing.com has been tracking the county’s housing inventory.
That’s equivalent to one home for sale for every 165 owner-occupied households in the county.
By comparison, the county had nearly 18,000 unsold homes on the market as the recession neared its peak in September 2007 – or one listing for every 35 owner-occupied households.
Thomas said the active listing inventory dropped 24 percent below the prior low established in March 2005, when there were just 4,912 homes on the market.
Listings have been dropping because fewer homeowners are putting their properties up for sale, Thomas said. In addition, the number of bank-owned foreclosures has been dwindling over the past year.
Inventory fell by 290 homes, or 7 percent, in the past two weeks, Thomas said. It’s down 11 percent in the past month.
At March 2005 levels, “everybody had a hard time navigating” the market, with home buyers competing for the few homes for sale and homes selling almost as soon as the for-sale signs went up.
Now, he said, “everything that is coming on the market below $750,000 that is priced right is absolutely flying off the market.
Buyers are now willing to pay a few thousand dollars above the last closed sale.
Thomas warned, however, that home sellers shouldn’t see the current market as an opportunity to cash in.
“Buyers are not going to pay an additional 10 percent above the last comparable sale because properties are appreciating at a very slow rate, not thousands of dollars every month”.