Low inventory and high demand are pushing the local real estate market to the extreme with buyers waiving contingencies, property inspections and even appraisals.

The last few months of multiple offers has forced the sales price to list price ratio for single-family, re-sale homes up to 100.3%, a level we haven’t seen since August 2007.

Prices have followed with the average home price now at it’s highest level since June 2011.

The high end of the market, however that is defined in a particular city, is on fire. The low end of the market is being driven by investors with cash and is also totally out of whack. The middle market, the move-up market is soft because the entry-level homeowners are still underwater.

What’s next?

That’s hard to tell because inventory is incredibly low. Home inventory is at its lowest point since March 2006. We don’t see that changing much in the near future for several reasons.

First, there is not a lot of new home building going on, which is necessary to relieve the pressure.

Second, many existing homeowners aren’t going anywhere. If they have good jobs here, where would they go?

Lastly, forget about phantom inventory. As of March, the banks owned 1,100 properties in the county. That number includes homes AND condos. There are currently 828 homes AND condos actively listed for sale.

Even if the banks put all their inventory on the market, it’s only five weeks worth!

We’re stuck with this market for at least the next year.

MARCH MARKET STATISTICS

The median price for single-family, re-sale homes, year-over-year, gained 6.4% in the county.

Even more telling is the sales price to list price ratios. Menlo Park weighs in at 104.6%. San Mateo was at 101.5%. Daly City was 101.1%.

Home sales were up 15. year-over-year, this in spite of low inventory. As of February, the banks owned 1,100 properties, of which only a small percentage are currently listed. Compare that with the 828 properties actively for sale.

The median price for condos was up 3.6% compared to last April.

Inventory of both homes and condos continues to be weak. Home inventory was down 16.8% compared to last April. Condo inventory was down 71.7% year-over-year.

Pending home sales were up 16% year-over-year. Condo pending sales were up 29% year-over-year.

This is an extraordinarily tough market for buyers. It’s important to be calm and realistic. If you don’t know what to do or where to begin, give me a call and let’s discuss your situation and your options.