How to Buy a Home in California When Inventory Is Low

Home buyers in California often have to deal with low supply levels within their local real estate markets. This can create a series of challenges, including bidding war scenarios.

But when it comes to buying a home in California, there’s a solution for every challenge.

California Housing Market Inventory Still Low in 2025

Let’s start with an update on current housing market conditions with a special focus on the inventory situation.

At the start of 2025, most cities across the Golden State are still experiencing a shortage of homes for sale. In short, there are more buyers in the market than there are properties available.

This imbalance puts upward pressure on home prices while increasing competition among home buyers.

At the end of 2024, the state of California had an “unsold inventory index” of 3.3 months. This means it would take 3.3 months to sell all the homes currently listed for sale, assuming no new listings came onto the market.

Of California’s 58 counties, here are the ones with the lowest inventory at the start of 2025:

• Santa Clara County: 1.2 months
• San Francisco County: 1.4 months
• San Mateo County: 1.5 months
• Alameda County: 1.8 months

Housing market inventory has improved over the past year, with more properties coming onto the market. But supply levels remain low from a historical standpoint.

Tips for Buying a Home During an Inventory Shortage

Let’s shift gears now and talk strategy. Home buyers have to go above and beyond when buying a house during an inventory situation. It requires careful research, forethought, and planning.

Here are seven things you can do to increase your chance for success:

1. Set a budget and start saving money.

Efficiency is key when buying a home in California during an inventory shortage. And one way to increase your efficiency is by having a budget in mind before you even enter the market.

This will allow you to make a strong offer when the right property comes along. It can also prevent delays, since you’ll have all of the budgeting math done ahead of time.

It also helps to start saving money — and the sooner the better. Home buyers need to have funds available for a down payment, an earnest money deposit, and closing costs. If you can show that you have all of the necessary funds in the bank, sellers will be more inclined to accept your offer.

2. Getting pre-approved for a loan before house hunting.

Do you plan to use a mortgage loan to finance your purchase? If so, you can also benefit from getting pre-approved by a lender before you start house hunting.

Being pre-approved means that you can submit an offer more quickly, because it determines your maximum loan amount.

Without a pre-approval, a house hunter might waste valuable time on back-and-forth communications with their mortgage lender. This can be detrimental in a real estate market with low inventory levels, like most of California.

3. Prepare to submit an offer quickly, possibly on the spot.

Depending on the overall pace of your local market, you might not have a lot of time to evaluate the asking price of each individual property.

When supply levels run low, homes tend to sell faster. In some cases, a seller might receive multiple offers within the first week of listing the property. This is where market awareness comes into the picture.

By researching your local market ahead of time, you’ll have an easier time evaluating the asking price for a particular property. This in turn can help you submit an offer more quickly.

4. Work with a knowledgeable real estate agent.

An experienced real estate agent can give you an added advantage when buying a home in a low-inventory market. Your agent can help you submit an offer more swiftly, compared to if you handled it on your own.

They can also do a comparative analysis right there on the spot, while you’re visiting the home. This allows you to get an offer in more quickly, which could make the difference between getting the home or losing it to another buyer.

5. Make a strong offer the first time around.

When housing market supply levels are low, sellers typically receive more than one offer after listing their homes for sale.

In this scenario, multiple buyers have to compete for the same property. These multiple-offer scenarios are common in California, especially at times when inventory levels have declined.

This underscores the importance of making a strong initial offer. After all, if you’re competing with other buyers, you might not get a second chance to present an offer to the seller. So you’ll want to make the first one as strong as possible.

By analyzing recent sale prices for similar homes in the same area, you can determine a good offer amount for the property you’re interested in. This is what real estate professionals often refer to as a comparative market analysis.

But you might not have a lot of time for such an analysis, when buying a home amid low inventory levels. You might have to submit an offer quickly, due to competing offers from other buyers.

6. Be realistic about your negotiating leverage.

When housing market supply levels run low, as in California, home buyers need to exercise a bit more caution when negotiating the sale price. That’s because sellers tend to have more leverage.

This is another reason to work with an experienced real estate agent when buying a house in California. Your agent can help you navigate the delicate process of back-and-forth negotiations, while minimizing the risk of losing the home.

7. Know your limits in a bidding war.

Low inventory levels within the real estate market often lead to bidding wars among home buyers. A bidding war is when multiple buyers are interested in the same property, so they keep raising their offers in order to outbid each other.

Bidding wars can drive up the final sale price, often significantly.

If you’re lucky, you’ll be able to find a suitable property and negotiate with the seller without ending up in a bidding war. But there’s a chance it could happen, so you’ll want to be prepared. Most importantly, stay within your budgetary limits and know when it’s time to walk away.

What to Take Away From This Guide

We’ve covered a lot of key information in this guide. Here’s what to take away from it:

• California’s housing market still faces low inventory in 2025, meaning fewer homes are available for sale.
• Low inventory leads to higher prices and increased competition among buyers.
• Buyers should be prepared for challenges like bidding wars and limited choices.
• Begin your search early and be flexible in terms of location, size, and desired features.
• Obtain pre-approval before house hunting to streamline the process and make your offers more competitive.
• Be prepared to make a strong offer promptly, potentially even on the spot.
• An experienced agent can provide valuable guidance and help you navigate the competitive market.
• Sellers often have more leverage in a low-inventory market.
• Be aware of your budget and avoid overpaying in a bidding war.