June 2012 — Shortage of Inventory Continues

June traditionally marks the beginning of the summer slowdown in real estate markets.  Memorial Day weekend and the school year end keep many people occupied with family activities and avoiding big decisions like selling or buying a home.

But this June was even slower than usual.  Only 41 homes were sold in Palo Alto, the lowest number of homes sold in any June in the past 10 years, including the real estate crash years.

The activity in the marketplace, however, was limited only by the availability of homes for sale.  New listings fell sharply from the previous month — 75 single family homes were listed in May and only 41 in June, a 45 percent month-over-month drop.  Year-over year the new listings also dropped but only by 13 percent.

The shortage of inventory kept prices steady even when the news of an economic slowdown hit the press.  And while some buyers got discouraged by the competitive market in Palo Alto and multiple offer situations, there were enough brave souls to buy as many homes as were put on the market.

During the month, 45 new contracts were accepted while only 41 single family homes were put on the market.  The median price remained virtually unchanged at $1.721M comparing with May 2012.  Months Supply of Inventory (MSI) ended at 1.1, the lowest number since August of 2007 — another indicator of a strong seller’s market.

The tight inventory, combined with all-time low mortgage interest rates create a perfect combination of factors that improve housing affordability for the buyers while improving the return on investment for the sellers.

This post originally appeared on PaloAltoCal.com