Expert Contribution

Real-life Examples

of Supply and Demand

Remember back in college the Econ class and the chart depicting the two opposing lines that represented supply and demand? In these last 5-6 months we have seen that play out in so many scenarios. First it was toilet paper and sanitizing wipes that everyone wanted, but stores were empty. Now with everyone working from home and distance learning, desks and printers are in short supply, and used goods are going for a premium. I went searching just last week for a printer and every store was out of stock on the base model printers. My least expensive option was a $600 printer, which was professional office size and hardly practical for home use. I even resorted to Ebay looking for used and refurbished models. EBay’s prices for used printers were equal to the price I would normally pay for a new printer, plus there was the cost for shipping. 

In today’s Real Estate market we are seeing the Supply and Demand model play out. Currently in Danville and Alamo, there are less homes for sale than there are buyers. For every home that comes on the market there are more than 1 set of buyers vying for that home. This can be great news for sellers, but it is a more than frustrating experience for the buyers. There are 2 factors that have created the shortage of homes: 1. lower than average number of homes currently for sale, and 2. historically low interest rates allowing more buyers to qualify to buy. 

I have one family who can buy a home up to $2.5 million dollars. They have been making offers on homes for over 6 months. Each time, so far, they have been outbid. They are quite aggressive in their offers; offers over asking, large down payment, no contingencies and short close of escrow. Even then, someone else wins in the bidding war. This might be a story similar to what you are hearing from many of your friends as well. 

Homes are selling at or above asking price within 10 days of coming on the market. Our homes here on the Westside offer large flat lots that are very appealing to the buyers coming from Metropolitan areas where they’ve lived in high density neighborhoods. I have a buyer who is moving from the Peninsula who was quite happy to see what an awesome home and yard $1.8 million could offer here in Danville. “Where we live in Palo Alto, we would have to buy a 1300 square foot fixer on a 5000 square foot lot for this price.” This is great news for the buyers coming from San Francisco and Peninsula cities, but bad news for the local move up buyers. The City folk are paying over market prices, driving up values even faster than normal appreciation rates. You can’t use data from the last sold home in the area because the current “for sale” home will sell for more. 

After 30 years selling Real Estate I know that this is just a cycle. The market will adjust. There will be a time when buyers will have the advantage. Just when this will happen, no one knows. My advice to buyers :buy sooner than later before you get priced out of your market and have to settle on a smaller home or a home in a different area. My advice to sellers; sell now. Especially if you are moving away from California, sell now. There is no better time to have the ability to sell a home with little effort and probably for more than you thought. A simple lesson in Supply and Demand Economics. 

See you around town!

Janice Jordan is a third generation real estate expert. She has lived in Danville for over twenty years. In her spare time Janice loves to hang out with her daughter Jenna and go on outdoor adventures of all kinds.


By Janice Jordan, Compass, Resident since 1998