It’s been nearly a decade since inventories of homes for sale were so low. Typically, inventories are seasonal, rising in the spring when the home-buying season begins and declining through the fall months as real estate markets quiet down over the holidays. This has not been true in recent memory, however. Inventories have fallen during the spring and stayed low—20 percent or more below normal—into the summer months.

Several factors are causing the inventory drought, which is much worse for lower-priced homes than those that are priced higher. First, more than a quarter of all homeowners with a mortgage owe more than their homes are worth, making it impossible for them to sell. Second, millions of foreclosures are still stuck in the processing pipeline and unavailable for purchase. Third, prices have yet to improve enough in most markets to create an incentive for owners to sell.

The drought is worst in the West, where foreclosures are processed faster and demand for affordably priced houses is strong. The top ten markets in the nation where houses were selling the fastest in June, according to, were Oakland, Denver, Anchorage, Fresno, Bakersfield, Seattle-Bellevue-Everett, San Jose, San Francisco, Detroit, and Phoenix-Mesa. Homes are turning over in less than 50 days in those markets, much faster than the national median of 84 days. Yet the national median for time on market is nearly 10 percent lower than it was a year ago at this time.

So what’s a homebuyer to do when there just doesn’t seem to be much worth buying? Here are some tips for finding hidden homes in today’s real estate market:

  • FSBOs. One place to look for homes that others might miss is “for sale by owner” homes or FSBOs (pronounced fizz-bos). FSBOs accounted for 15 percent of all home sales during the boom eight years ago when selling homes was easy, but today they are about half that. Finding and buying a FSBO is more difficult than finding and buying a listed home for several reasons. First, your agent will need to get paid. Many FSBO sellers understand that and will pay a buyer’s agent commission, but some won’t, so you will have to come up with the cash if you want the services of an agent, which I highly recommend. Second, FSBOs are not listed on the major homes-for-sale sites; they are entirely outside the pale of traditional real estate and can be found only on FSBO sites or local directories like Craigslist. These may or may not be as accurate or current as the real estate sites you are used to, so buyer beware.
  • Expired listings. Typically, the contracts that sellers sign with brokers expire after 90 days. If the contracts aren’t renewed, the listing expires and is removed from the multiple listing service (MLS) and all the other sites that get their data from the MLS, including national aggregators like, as well as Zillow and brokers’ sites. However, even though a listing has expired, the seller may still be interested in selling. Ask your Realtor to search your local MLS for expired listings over the past six months and see if any interest you.
  • Pre-foreclosures. Otherwise known as short sales, these are properties in default that have not yet been foreclosed upon and may not even be repossessed. Banks want to get rid of them as soon as possible, which is why more homes are being sold as short sales than ever before. The downside for typical homebuyers is that pre-foreclosures are popular with investors paying all cash because they sell at a discount of 22 percent on average.
  • Rentals. Millions of investors buying up homes are renting them out until prices rise. Not all of them are good landlords and many are losing money, but you can ease someone’s burden by making an offer to buy. If it’s an attractive enough offer, you will have yourself a deal on a home that never was listed but that is in move-in ready condition. Find single-family rentals on Craigslist or rental sites like RentJungle or
  • Higher-tier homes. Buying a home you can’t afford is never a good idea, but if you can stretch your credit and cash a little, perhaps you can move up a tier in your house hunt. Higher-end homes are more plentiful in today’s market by a factor of three to one because negative equity is much more prevalent among mid- to lower-income homeowners.

Finally, this is a time when you need a really good buyer’s agent. Not all agents have the experience and certified training of a buyer’s agent. Make sure you are working with someone who can help you get your finances ready to buy and who really knows how to sniff out the hidden homes.

Steve Cook is Executive Vice President of Reecon Advisors and covers government and industry news for the Reecon Advisory Report.

During his 30 year career in public relations and journalism, Cook has been a print and broadcast news correspondent, served two Members of Congress as press secretary, was a senior executive in the world’s largest independent public relations firm in Washington and Chicago and was vice president of public affairs for the National Association of Realtors from 1999 to 2007.At NAR, Cook supervised external communications including news and editorial coverage, video production, speech writing and communications strategic planning. He helped to manage NAR’s multimillion dollar network advertising program.

Cook is a member of the National Press Club, the Public Relations Society of America and the National Association of Real Estate Editors, where he served as second vice president. Twice he has been named one of the 100 most influential people in real estate. He is a graduate of the University of Chicago, where he was editor of the student newspaper. In addition to serving as managing editor of the Report, Cook provides public relations consulting services to real estate and financial services companies, and trade associations, including some of the leading companies in online residential real estate.