Market madness

With inventory at a staggering low, home-buying becomes increasingly competitive

Caitlin and Grant Higginbotham (and their dog, Rocco) are hoping to buy their first home in Chico this year, but they’re facing a difficult market.

Caitlin and Grant Higginbotham (and their dog, Rocco) are hoping to buy their first home in Chico this year, but they’re facing a difficult market.

Photo courtesy of the Higginbothams

Caitlin and Grant Higginbotham have been monitoring the local real estate market for about a year now, going to a few open houses and watching for trends in hopes of testing the waters before diving in head first. About a month ago, they took that plunge, finding a real estate agent and launching their search for a home in earnest.

“We’ve found a couple places [we liked] and we put an offer in on the very first one,” Caitlin said recently by phone, following up quickly with: “We didn’t get it.”

The Higginbothams are pretty typical when it comes to the profile of local would-be buyers. They’re young professionals who, at 29 years old, are looking to get out of the renter’s game and set down roots. And while their wish list seems far from extravagant, it’s been hard to find something that fits the bill.

“We’re looking for a newer home,” Caitlin said, a three-bedroom, two-bath with a yard for their Corgi, Rocco. “But most of the homes available are older, which means the features we want aren’t there.” The newer homes they have looked at “don’t necessarily have the yard we want, or they were built right next to each other,” she continued.

To add to the frustration, the market is clearly flooded with buyers all vying for the same small pool of available houses.

David Bronson, owner of People’s Choice Brokers and Mortgage Group and president of Sierra North Valley Realtors, says agents must embrace technology to stay relevant.

Photo by Meredith J. Cooper

“Our realtor texts me and my husband and says, ‘Hey, there’s this house you might like,’” Caitlin said. “But by the time we get back into town that day—at 4 p.m.—sometimes there’s already five or six offers in. And we haven’t even had a chance to look it.”

The Higginbothams are far from alone. The frustration is widespread, says David Bronson, owner of People’s Choice Brokers and Mortgage Group. When the market crashed about eight years ago, builders stopped building. Over the past several years, though, the economy has bounced back and mortgage interest rates have remained historically low, leaving buyers ready to, well, buy. But add a lack of new housing to a population that’s not selling—baby boomers aren’t moving, Bronson said, and others are locked into 30-year mortgages with good rates that they don’t want to lose—and there aren’t enough houses to meet demand.

To put it in perspective, he said, in a typical year, Chico sees a 10 percent turnover rate—meaning 1 in 10 houses would go up for sale within the year. Right now, he’s looking at a 4 percent to 5 percent turnover rate in the Chico market. Last Thursday (Feb. 8), for instance, he said there were 108 single-family homes for sale in town. Take out those that are under construction and there were only about 80.

“That’s exceptionally low,” he said. “Normally, there are 200 to 300 for sale at any given time.”

Bronson isn’t new to real estate, though he does represent a younger generation of agents, one that embraces new technology that is integral to staying relevant these days. The Yuba City native started People’s Choice 13 years ago as a mobile business and it’s been successful—there are now about 50 employees scattered throughout the state. A few years in, he saw the need for a physical office and set up shop off of East First Avenue, near Bidwell Perk. There’s a second office in La Mesa.

The past decade has seen drastic changes to the real estate market, but perhaps the biggest one affecting agents like Bronson, who is also a broker, is technology. With sites like Zillow, for instance, he says many clients have more information about houses on the market than their agents do. As president of Sierra North Valley Realtors (formerly the Chico Association of Realtors), he says this is a widespread trend—it’s not just happening in Chico.

It’s not uncommon for a house in Chico to go on the market and have five or more offers in a matter of days.

“We’re seeing a lot of younger agents getting into the field,” he said, “and a lot of the older agents are still doing things the same way.”

Homebuyers today expect information at their fingertips, and that means agents must be tech-savvy enough to keep up. The sellers’ market likewise keeps agents on their toes. It’s not uncommon these days for a buyer to place bids on four to six different homes before making a purchase, Bronson said. That’s quite a bit more than the average of one or two.

“By the time they place a bid, they’ve already decided they really want that house,” he said. “It’s an emotional roller coaster. So, there’s a lot of discouragement because of the market.”

Bronson is optimistic about Chico’s future market. Of course, there’s new construction happening all over town. That’s great, Bronson said, but it won’t have a huge effect on the biggest pool of buyers, who are looking for something in the $200,000-$300,000 range. “There’s only one development with homes under $300,000,” he said.

Financially speaking, interest rates, while still low, are at a four-year high. Bronson sees that as an indicator that the market is chilling.

“The Fed keeps interest rates low to spur the economy,” he explained, “and then raises them higher to stall inflation.” He anticipates the latter to continue for a while, which will reduce the buyer pool and, in turn, prices. “It’ll control demand,” he said. “We’ll see a little more normalcy in the market.”

For people like the Higginbothams, the state of the current market can be discouraging. But they’re not giving up. Caitlin says she’s optimistic they’ll find a home to move into by summer. She’s banking on her agent’s ability to catch wind of sales before they’re publicized—the only way she sees them getting a leg up. She and Grant also have been working on a short bio about themselves that they can present to sellers, something she says she hopes will set them apart.

“We have a couple leads that I think we’re hopefully going for,” she said. “Our realtor and a lot of people we’ve talked to say that spring is the time when people want to move. We’re hoping this spring we’ll luck into a home.”