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5 California Housing Markets With the Lowest Inventory in Early 2024

In this report: An update on the housing market inventory situation in California, and a list of real estate markets with the lowest supply levels in 2024.

You probably already know that the California housing market has low inventory levels. This means there aren’t enough homes on the market to meet the demand from buyers. But a new report broke it down by county, revealing which California housing markets had the lowest supply levels at the start of 2024.

Alameda County, located in the East Bay region, currently has the tightest inventory conditions of any county in the state of California.

Tightest Housing Markets in California, as of January 2024

Earlier this month, the California Association of Realtors (C.A.R.) published a housing market report with data for the entire state as well as all 58 counties. That report showed that tight inventory conditions continue to challenge home buyers across the Golden State.

According to 2024 C.A.R. president Melanie Barker:

The housing market had a tough year in 2023 as a shortage of homes for sale and high costs of borrowing continued to have a negative impact on housing inventory…

Not surprisingly, the San Francisco Bay area had the lowest housing market inventory of any California region. And at the county level, the East Bay’s Alameda County currently has a lower level of real estate supply than any other county in the state.

To measure housing market inventory levels at the county, regional and state level, C.A.R. uses a metric known as the “Unsold Inventory Index” (UII). This index measures the number of months it would take to sell the supply of homes on the market at the current sales rate.

Out of the 58 California counties, here are the five with the lowest inventory index. The number beside each county indicates the months of supply at the start of 2024.

  • Alameda: 0.9
  • San Mateo: 1.1
  • Santa Clara: 1.1
  • Contra Costa: 1.2
  • Marin: 1.5

Alameda County Housing Market Highly Competitive

As you can see from the above list, Alameda County is currently the tightest housing market in the state of California, when measured by inventory.

A few months ago, we predicted that the Alameda real estate market would be highly competitive in 2024, partly due to low levels of supply. Here’s a quote from that November 2023 blog post:

“In 2024, home buyers in cities like Oakland, Fremont, Hayward and Livermore can expect to encounter a high level of competition and a fast-paced real estate market.”

In addition to having the lowest inventory level in early 2024, the Alameda County housing market also had the second-largest decline in total real estate listings over the past year or so.

According to the January 2024 C.A.R. report, active real estate listings declined in 32 of California’s 58 counties. The greatest year-over-year declines occurred in Shasta County (-65%) and Alameda County (-41%).

Contra Costa County—Alameda’s neighbor to the north and the other half of the “East Bay”—came in third with a one-year inventory reduction of -39%.

Inventory Growth on the Horizon?

The current housing market inventory situation in California (and especially in the Bay Area) will continue to present challenges to home buyers in 2024. But there is some good news here as well.

Lower mortgage rates and other factors are expected to spur the real estate market over the coming months and possibly increase the number of listings. According to the January 2024 C.A.R. report mentioned earlier:

“With mortgage rates sliding back to the lowest level since early August, the market will hopefully see more for-sale properties being listed as we kick off the new year. ”

3 Strategies for Buying a Home in a Tight Market

In the Bay Area, a California housing market with particularly low inventory levels, home buyers have to work harder and smarter in order to succeed. Here are three ways to do that.

1. Make a cleaner offer with fewer contingencies.

In a real estate context, a “clean” offer is one that has few or no contingencies (conditions that must be met in order for the sale to proceed). Purchase contract contingencies can offer some important protections for buyers, but they also make your offer less attractive to sellers.

If you happen to be in a real estate market with very low inventory and strong competition from other buyers, consider reducing the number of contingencies you include.

2. Be ready to pounce on new listings.

Keep in close contact with your real estate agent during the house-hunting process. Tech-savvy agents receive alerts and updates the moment a new property comes onto the market. But if it’s a nice home in a desirable area, it will probably sell fast.

Be willing to visit and view new properties as soon as they hit the market, to get a head start over other buyers.

It’s not always convenient, and it might mean cutting out of work early for the day. But it’s just something you have to do to succeed in the California real estate market.

3. Understand the negotiating dynamics.

In a low-inventory real estate market, sellers usually hold all the cards. They often have the luxury to choose from multiple offers, sometimes within days of listing the property for sale.

This means they also have greater negotiating leverage.

As a home buyer in a tight housing market, you might not have a lot of negotiating room regarding the sale price and other terms. And you might only get one chance to present your best offer. Use comparable sales and your real estate agent’s advice to shape a strong initial offer.

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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