Tess Vigeland: You'd think it would be a buyers' market these days for homes. After all, prices are down more than 30 percent on average, and they continue to slide. But in many places around the country, home sellers are now in the drivers' seat, and the market seems to be roaring back.
Deborah Wang from KUOW in Seattle has the story.
Deborah Wang: If you're looking for evidence of a real estate comeback, just check out any Sunday open house in Ballard, a popular Seattle neighborhood.
Kliman: How are you folks doing? Hey, shoes are fine, come on in. Yeah, perfect.
This is a small, two-bedroom home built in 1927. It's in a quiet neighborhood and is close to a popular elementary school. And the house is completely renovated.
Jed Kliman: We have stainless steel appliances, quartz slab counters, new cabinets, these are bamboo hardwood floors.
Jed Kliman is the listing agent. He works for a real estate company called Windermere.
Kliman says at $389,000, the house will go fast. He says there are a lot of people looking to buy homes in Ballard, and very few houses for sale at that price.
Kliman: Somebody flipped a switch about two-and-a-half months ago, and Ballard inventory is down about 40 percent from a year ago. So the market is on fire right now. Everything, if it's well priced and it's a good home, it's going to sell quickly.
And it's not just the case in Ballard. Throughout the Seattle area, the number of homes for sale is down more than 30 percent from a year ago. In some parts of San Francisco, Denver, Los Angeles, and San Diego, the shortage is even more pronounced.
Tim Ellis: Inventory is just dropping like a rock. I think that's really the big story.
Tim Ellis is a real estate analyst with the property firm Redfin. He says housing inventory always picks up after the holidays. But in many markets in the U.S., inventory has dropped for the last two months. Why is this happening? Ellis calls it a hangover from the housing bubble.
Ellis: You know, the traditional, kind of, buy a home and then hold it for a while and then sell it, that cycle on average lasts about 7 years. Well, when you think about where were seven years ago, that was kind of right at the peak, is was right at the height of the boom, so the people who bought seven years ago might be today's sellers in a normal market, they can't afford to sell.
So, with so few properties on the market, the competition to buy a home is fierce. Remember that house in Ballard?
Joe Therrien: What you got?
Kliman: All right!
Just one day after the open house, agent Jed Kliman sits down in a conference room with the home's owner Joe Therrien. Kliman has a big binder of papers in front of him.
Kliman: So…we have six offers and there is a seventh being emailed over in the next 10 minutes or so.
Therrien: Wow, I am really kind of at a loss for words.
Kliman: It's pretty exciting.
Kliman says all six buyers are offering the full price of $389,000 or higher. Two people are offering all cash, two have done pre-inspections.
Owner Joe Therrien is stunned. He says the bidding war took him entirely by surprise. He didn't think anyone would offer full price for his house.
Therrien: I'm really shocked that we even asked for that much because all you read about and all you hear about is the median price of homes dropping every month, and when I first thought about putting it on the market I was not happy about putting it on under those conditions, but I wanted to sell. So this is roughly equivalent to winning the lottery for me.
And Joe Therrien's experience is becoming more commonplace. Real estate agents say they are seeing a steady rise in competitive bidding, especially for more affordable homes in popular Seattle neighborhoods. Redfin says more than half of its transactions now involve multiple offers. Tim Ellis says in that way, it feels like the height of the housing boom.
That may be great for people who are selling their homes. But where does that leave people who want to buy?
Greg Myers and his family came to check out Joe Therrien's open house. The last house they were interested in had 12 offers on it.
Greg Myers: I guess I have to say I am feeling a little discouraged at the moment. It may be just that, um, people will continue to hold off until prices come up, and by the time the houses I want to buy are on the market, they are too expensive.
Ellis: Buying a home this year is going to be a frustrating, drawn our process.
That's Redfin's Tim Ellis.
Ellis: Especially if you are looking in neighborhoods that a lot of other people are interested in.
But Ellis says there may be some good news for buyers. Even with the tight inventory, he doesn't expect any big jumps in prices this year. That's because of all those foreclosed properties that are still being held by banks. He says those are likely to put a damper on prices for years to come. And even though the market may be acting really strangely this year, he expects supply and demand to come back into some kind of balance… eventually.
In Seattle, I'm Deborah Wang for Marketplace Money.