Low Inventories in Silicon Valley Push Buyers to Search for “Greener Pastures”.

The latest news is that much of the United States’ housing market is regaining a healthy balance between buyers and sellers, with economists forecasting slowed growth as inventories expand. A larger inventory means more choices and flexibility on pricing. Thus, a whole group of prospective buyers—previously intimated by (or squeezed out of) the market—stop toeing the edge of the pool and choose to jump in.

Meanwhile, prices in parts of the Bay Area’s housing market have reached pre-recession levels—a fact that is significant because of the popular belief that the unusually low inventories are due, in part, to homeowners waiting to sell until they can recover all of the equity lost in the financial downturn. The expectation is that, as prices rise, homeowners will feel they can finally sell their homes without losing money in the process.

Since the Bay Area often leads the U.S. housing market, one would presume that inventories would rise accordingly. After all, we’re seeing this happening in other parts of the United States, and we have finally reached the point where homeowners should feel most comfortable selling their homes. However, this is not what is actually happening.

The Bay Area’s June inventory remained the lowest in over a year (1.3 months) with supply remaining fairly constant (as a matter of fact, there was a slight decrease in new properties added to the market between May and June). A significant addition of new properties being put for sale, ushered in by the promise of high returns, has yet to happen. And despite claims that prices are slowing, they continue to climb nonetheless: The median Bay Area home is selling for $551,000 — the highest it has been all year. For the past three months, the average home has sold for $20,000-$25,000 above the asking price.

In places such as San Francisco and the South Bay (where home prices are 10% above “pre-recession” levels), a growing number of homebuyers are feeling the squeeze of soaring prices. Many have begun to search elsewhere for homes, including the East Bay, where properties are still recovering from the 2008-09 recession. A shopper “exodus” would drive up demand in these areas and likely speed up any remaining recovery–especially if inventory remained low.

If you’re a prospective buyer, the East Bay serves as a potential escape from the sky-high prices of Silicon Valley. On the other hand, if you’re thinking about putting your home up for sale, a potential influx of serious buyers should be worth paying close attention to. After all, in order to maximize returns on your equity, you’ll likely want to take advantage of these larger market conditions. A team like Lifestyle Real Estate can help with this by showing you how to best market your home and ensuring that you’ll be on the road to the next chapter of your life as soon as possible.