A shortage of houses for sale has caused an intense bidding war among Southern California homebuyers, who are eager to snap up prime properties.
In California, there is a three-month supply of homes for sale, half of what would be considered a healthy amount, according to August data from the California Association of Realtors.
That means whenever a desirable home comes up on the market, a feeding frenzy is sparked among homebuyers.
Recently in San Marino, there were only 13 homes up for sale. The upscale San Gabriel Valley city typically has as many as 40 homes on the market, said Carrie Benuska, a realtor with Teles Properties in Pasadena.
She said the sluggish economy may have dampened peoples’ ambitions to upgrade to bigger homes.
“Not that long ago, people were doing that all the time,” Benuska said. “They bought their home, they fixed it up, lived there for five years and bought something bigger and better.”
“It’s like shark infested waters,” said Benuska. “Sharks are waiting to gobble up your listing.”
Benuska recently sold a home in San Marino for $2.7 million, roughly $500,000 above the asking price. The house, located on Rosalind Street, received 18 bids.
Aidan Murran, 48, said he's thinking about selling his home in the La Canada-Flintridge area. Murran walked through an open house on a recent Sunday, analyzing what home prices are like in his area. He was pleased with the pricing levels, but he said he plans to wait for even better market conditions.
“It makes me want to hold off and exploit that a little bit more,” Murran said.
Realtors say the increasing prices for homes in top areas is supply-and-demand at work: too many buyers, not enough houses.
Another factor is that distressed properties – homes in foreclosure or a short sale – represent a smaller percentage of homes sold.
As a result, open houses have been packed.
Teles Properties Realtor Ray Wells oversaw a sale of an Arcadia home that had three offers, but he declined to say how much the house sold for. About 200 people toured the house, which has five bedrooms and four bathrooms. The house was listed for $849,000.
“We’re seeing the buyers being a little bit more aggressive about going after the houses because they know they are competing against so many people,” Wells said.
Buying a home in all cash has also increased, making up one-third of all California home sales, according to the California Association of Realtors.
Realtors prefer cash because it speeds up when escrow closes. A cash sale can close in 14 days, compared to a home sale involving a loan that might take 30 days, Benuska said.
“Anytime you got people coming in with cash, anyone who is getting a loan is going to have a bit of trouble because their offer is never going to be as desirable,” said Benuska.
That can be disheartening to first-time homebuyers, who often have to bid on several homes in today’s market in order to land a deal.
Ruth McNevin, president of the Pasadena-Foothills Association of Realtors, said she knew a couple that made eight offers on homes but just couldn’t compete with the other buyers.
The couple ended up getting so discouraged that they stopped looking for homes, she said.
But Stephen Chien, a first-time homebuyer, remains hopeful that he can find a house for his family. Chien looked at several homes over the weekend, including one in La Canada-Flintridge.
He said even though he thought real estate prices were down a bit, some homes were still expensive.
“We’re looking and hopefully we’ll find something,” Chien said.