Is our low inventory typical? Our Frustrating Supply Problem
I've been asked quite often in the last few weeks why does inventory feel so low? It's hard to speculate why exactly, but what I can say is that in my seven years of selling real estate in the Burlingame, Hillsborough, and San Mateo areas, I've never had a client tell me they felt like they had "enough" homes to choose from. The struggle with enough inventory is constant, and it's exacerbated even more in the summer months as we see fewer and fewer homes listed. I'm optimistic we'll see the typical slight bump in inventory after Labor Day which will continue through late October. Hopefully this will give relief to many homebuyers who are eagerly waiting for the right home to pop up.
I'm also asked frequently what factors seem to be driving the market. While interest rates are at historic lows, many buyers are choosing to take advantage of extraordinarily cheap financing which has given them greater purchasing power. However, this isn't the whole story. With our robust job growth in the high tech and biotech sectors (Burlingame alone has over 30 biotech firms), as well as finance and healthcare (UCSF, Stanford, and many local hospitals), these companies are successfully recruiting the best and brightest from around the world, and many of them want to live right in the heart of the north peninsula. The buyer pool has now become a lot more international than ever before...over half of my clientele is foreign born and educated in the U.S., and choosing to settle down on the peninsula. Lastly, more buyers than ever before are choosing homes in the Burlingame, Hillsborough, and San Mateo areas because they view them as "end destinations": people come here and stay since they love it so much. Only around 3% of the inventory in Burlingame turned over last year, well below the national average.
So, here's a chart of the inventory in Burlingame over the last 24 months. Note in August we're showing the fewest number of homes for sale in any month in the last two years. (Also see my latest update on the Burlingame market for July 2012 for more detailed market data and recent homes sold.)
However, if we take a look at the inventory levels for the entire Bay Area, we can see a relatively similar and even more consistent theme.
If we run the same inventory chart for San Mateo County, and run it with sold median prices, it shows an increase in price, partially due to low supply.
Here's the same chart for Burlingame, with sold median price plotted over the first one.
Interestingly, Hillsborough's market is more balanced. You can read my latest update on the Hillsborough market here (July 2012).