Home shopper Dian Schneider was four houses in on a whirlwind tour of local homes for sale Friday when her real estate agent issued her a warning.

"Now if you like this one you'll need to move today because there are already two offers on it, and they're both above list price," said Anna Hernandez of McKinzie Nielsen Real Estate. "They're not crazy high, but you'll have to go in high, too, if you're serious about it."

Schneider nodded knowingly as she peeked inside closets, flushed toilets and opened cabinet doors.

The 50-year-old single mom had already missed out on two homes she'd made offers on. She was outbid on one, and pulled out of a second over concerns about its dated electrical system.

"In hindsight, I probably should have taken that one," Schneider said.

Almost all the available inventory in her price range is badly in need of repairs, and upgrading the electrical on the home she passed up wouldn't have cost as much as she'd assumed, she later learned. But back then, she didn't fully appreciate how lucky she'd been to find something.

The Bakersfield area had only 583 single-family homes for sale in March, excluding offers for short sale properties contingent on bank approval, according to the Preliminary Crabtree Report.

A short sale is an agreement between a lender and a seller to market a home for less than the balance of the mortgage. Those deals take much longer to close because both the seller and the bank have to sign off on the purchase.

Even including contingent offers, however, the Bakersfield area had about a third fewer houses for sale last month as it did in March of last year.

Bidding war return

The result has been fierce bidding wars and almost immediate turnover for anything of quality that's priced reasonably, whether it's a modest starter home or a mansion.

"Everybody's pretty much in the same boat right now, regardless of price," said Robert Morris, who sells for Watson Realty ERA. "The supply keeps dropping and dropping and there's nothing replacing it."

Broker Nancy Harper of Nancy Harper Realty recalled listing a home the day before Easter. By Easter Sunday, it had six offers on it, and when she called the losing agents to tell them their offers had been rejected, two of them burst into tears.

"They told me they'd written something like 14 offers for clients and just couldn't get one accepted," Harper said. "When you have agents bursting into tears, boy, that's low inventory."

It's so bad that Harper has learned to wait until after dinner to list anything. Otherwise she won't get to eat. "The phones just go crazy," Harper said.

Anxious home shopper Rex Hill, 63, is planning to submit two offers simultaneously to hedge his bets. "They probably won't accept them, anyway," he said with a tinge of resignation.

Where did all the houses go?

The area's housing inventory comes from two sources, new construction or the existing home market, both of which are "discretionary," said Stuart Gabriel, a professor of finance at UCLA and director of the university's Ziman Center for Real Estate. Sellers can opt to sell a home now or sit the market out until conditions are more favorable, and right now all kinds of sellers are holding back, Gabriel said.

New construction screeched to a halt during the real estate crisis because builders couldn't make much profit competing with bargain basement foreclosures and short sales.

There are plenty of existing homes, but many of them are in the hands of banks that are reluctant to dump their massive shadow inventory all at once. That would drive down the prices not only of those assets, but of other homes with outstanding mortgages banks hold that could be driven into default in another market collapse.

"It's in their best interest to let these houses out in drips and drabs to maintain their value," Gabriel said.

Then there are the families who own homes but can't or won't sell because either they owe more than the houses are worth or they don't think they can get a good price for them in a market that has seen values plummet.

At the same time, attractive prices and record low interest rates are drumming up demand.

Although the housing shortage is nudging up home values, local prices still are down 62 percent from the top of the market. That was June 2006, when the median price of an existing home in Bakersfield was $299,925, according to the Crabtree Report.

Last month, the median home price was $131,000. That's not a huge incentive to sell, even factoring in the 9 percent increase from February.

"I think a lot of that jump was just the seasonal increase we see every year coming off the weak winter sales period," said appraiser Gary Crabtree, who researches and publishes the monthly report on local market conditions. "It will be interesting to see what happens going forward, because I just don't see how prices can stay low with supply like this."

The search

Buyers are "beyond frustrated," said John Fugate, an agent with Watson Realty ERA. "They hear these stories on the news about a glut of supply all over the country and they don't understand why that's not true here."

Marlana Luna, 28, has been looking for several months now and can't find anything she considers worthy of an offer. Luna is starting to panic a little because she's in the process of an adoption and would like to be at least in escrow by early June.

"I had no idea it was going to be this hard," Luna said. "I have friends who've bought homes, and it seemed so simple for them."

Luna and her husband have resolved to be disciplined, however. "We don't want to settle for just any house because that's what's available," she said. "We're looking for a long-term house that we can stay in for years and be happy with."

A new construction revival?

Some shoppers have thrown up their hands and turned to the beleaguered new home market.

"We're building twice as many homes as we did a year ago, but last year we sold 75 homes, which makes me choke it's so low," said Bruce Freeman, president of Castle & Cooke Homes. "That's not the flood I wish it were, but there's clearly more interest."

To win a bid on an existing home, buyers generally are having to offer more than the asking price, and even make up the difference if an appraisal comes in lower than the negotiated sale price, which is common in a more conservative financing culture and puts loans at risk.

Not everyone can afford to do that, of course, "but if you can come out of pocket with a bigger down payment, you do because otherwise you're back to the drawing board and God only knows when you'll find another house again," Realtor Harper said.

Deeper pockets give investors with all-cash offers an edge over families who have to apply for loans, Harper added.

"When you're paying cash, you don't have to worry about the appraisal," she said.

Judy Miller of Coldwell Banker Preferred advises clients not to come up with more money when a property appraises low unless it's truly listed below market value.

"It would be better to tell the seller, 'Reduce the price or you don't have a sale,'" she said.

The problem, though, is that in a seller's market, buyers don't have much leverage to make demands.

Single mom Schneider knows her position is precarious, and has made her peace with it.

"I'm not in a hurry, so it's cool," she said. "When it's right, it's right. It will happen when it's supposed to happen."