There are only 2033 Homes for sale in Sacramento as of the end of March 2012. We have seen a drop of 57% in the number of available homes for sale in Sacramento county. The number of homes for sale has dropped every month for the last twelve months. There has been a 61.4% drop in the number of homes for sale in the last fifteen months. We only have a 1.3 months supply of homes for sale around the Sacramento county. We are in what is considered a sellers market. It is considered a sellers market when the inventory of homes for sale is below six months.
It is now very difficult to buy a home in our area. Many of the listings are getting multiple offers. If a person is looking for a home in the under 120k range, they are losing out on bids from the cash buyers. The cash buyers are buying homes that are priced below 100k because they can rent theses homes out for $1000.0 to $1100.0 per month. That is a much better return on their investment than what the bank is offering. I am actually getting worried about the lack of inventory because if it drops for another three months in a row, I think many of the first time homebuyers will give up and drop out of the market. We have been closing 1280 to 1597 homes per month the last three months. If the inventory drops and the first time homebuyers get out of the market, we might only close 980 to 1250 homes per month. That will really put a hurting on the income of the local realtors.
We finally did see our first price increase in home prices for March 2012 also. It was our first price increase since the end of the federal tax credit in May 2010. We have not seen a price increase before that since 2005. I am certain that our values will increase for the rest of 2012 because of the lack of supply of homes for sale in Sacramento CA. The wise investor will buy a house this spring so that they can take advantage of the price increase in homes. The people who buy now will get the best of both worlds because they will get a 10% return on their investment along with capital appreciation. Even if I was wrong about the price appreciation coming this year, we will see home appreciation some time soon because we have been in this housing slump for seven years now.