Tuesday, May 16, 2006

Homebuilders Continue to Crank Out Homes as Inventory, Cancellations Rise

From the Bakersfield Californian:

The number of houses for sale in Bakersfield topped 3,000 in April -- the most the market's seen since the mid-1990s when the state was steeped in a recession. Roughly 3,200 houses sat on the market last month, up from about 770 at the same time last year, according to data compiled by Bakersfield appraiser Gary Crabtree. That's compared to about 2,480 homes for sale in 1994, shortly after the market took a drastic tumble.

Local real estate agents say the rapid climb in housing inventory since last summer doesn't mean prices will plunge. But they concede that it does reinforce a shift favoring homebuyers...Sellers are accepting offers lower than what they asked for and sometimes helping buyers with $4,000 or $5,000 in closing costs, Mallory said.

New construction homes are still in big demand, which is contributing to the glut of houses, said agent Chuck Dawson. "They're just cranking them out as fast as they can," Dawson said. Many new-homebuyers are moving up from existing houses that they then put on the market, he said. As older homes continue to languish on the market, the prices of new construction will likely also go down, he said.
Also, another article on cancellations in the Central Valley:
The number of local homebuyers canceling builder contracts has crept skyward in the past year, along with worries about rising interest rates and the real estate market's future. Kern County's cancellation rate was 8.1 percent for the first three months of 2006, up from 2.3 percent a year before, according to data from research firm Hanley Wood Market Intelligence.

Despite the increase, Kern's market is doing well compared to other counties, said Patrick Duffy with the Costa Mesa-based firm. Fresno's cancellation rate was 13.7 percent for the same period this year. During the mid-1990s, Southern California saw rates of 20 or 30 percent, Duffy said.
Cancellation Rates:
Southern California (Mid-1990s): 20-30%
Sacramento (2006): 28%

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