Like housing markets overall, the market for luxury homes is growing tighter as the spring buying progresses.  Though still a buyer’s market, the ILHM Luxury Housing Report for last week shows a pattern of rising prices and fewer days on market since the first of the year.

Days on market for luxury homes have fallen to 120 days, significantly higher than the 85 days for April registered by all listings on Realtor.com but down from 155 days at the outset of the buying season in February.  Media price per square foot is $334 and the ILHM national luxury composite price is $1,128,509.  Prices have decreased on some 31 percent of homes in the ILHM market profile have 9 percent of been relisted.

Most markets in the Institute for Luxury Home Marketing report are improving.  Those with the fewest days on market are Silicon Valley (138) San Francisco (153), Washington (156), Austin (158) and Seattle (163).  New York City had the most expensive average luxury price in the nation, ($4,129, 649) followed by Los Angeles ($2,222,451), San Francisco ($2,015,114), Silicon Valley ($1,890,121) and Washington ($1,556,589).

It may be hard to believe, but the dramatic drawdown in inventories during this spring buying season is bringing some cries of “housing shortage” from hotter markets around the county. But is there solid evidence to support such a claim?

On Realtor.com, year-over-year inventories are down 21.48 percent through March. NAR reports first quarter inventories existing homes are down 21.8 percent nationally. At the end of the first quarter there were 2.37 million existing homes available for sale, a 41 percent decline since the summer of 2007 when inventories set a record of 4.04 million homes.

“We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges. This is good news for many sellers who wish to list now, or for those waiting for prices to improve,” said Lawrence Yun, NAR’s chief economist last week.

Reports of multiple bids, price increases, slim pickings and discouraged buyers leaving the market are popping up in in a few markets, largely the nation’s hottest markets where inventory declines exceed the national averages but also major foreclosure centers like Phoenix where have been falling until recently. In others, unique local conditions such as the opening of factories or military facilities, natural gas booms in Pennsylvania and North Dakota, and seasonal shortages in university communities are causing market tightness.

In the Washington DC market, perennially one of the top ten nationally in price increases, evidence is strongest that the pendulum may be shifting towards a seller’s market for the first time in five years.

“Even though there’s a glut of homes throughout parts of the country, the Washington region seems to have the opposite problem, especially in the lower price ranges.

“Many of the outer suburbs still have plenty of houses in the lower price ranges. But less-expensive homes are very hard to find closer to central D.C.: 68 percent of homes offered for less than $350,000 are located in the outer suburbs beyond Montgomery County, Arlington and Alexandria. In the District, Redfin counts only 862 listings for less than $350,000,” reported the Washington Post May 4.

California markets like San Diego and Irvine where home building has been at a virtual standstill and is strictly controlled, population growth is creating new demand for housing.

“We’re going to grow by a million people, over that period of time. And that represents a demand of over a quarter million units of housing or more. And we have to supply them as an industry. What’s going to change is what we supply and where we build,” San Diego developer Gary London, president of the London Group Realty Advisers, recently told KPBS radio.

Most reports from Realtors reporting tight markets around the nation on the ActiveRain website focus on difficulties finding affordably priced, entry-level homes.

“Thinking of buying a home in Spring Lake (NJ) in the entry level pricepoint? Your choices are extremely limited this Spring season. Currently, there are only 6 active listings in this pricepoint,” reports Diane Glander of Diane Turton Realtors.

“This morning I was taking look at some of our local housing statistics. The first very noticeable thing is that the number of single family homes for sale in Palm Coast now stands 844. When I first began selling home in Palm Coast in 2007 there were over 3,000 home for sale. The current inventory of salt water canal homes in Palm Coast now stands at 89. This is down from 150 just two years ago,” reports Kendall Caputo of Real Living/ Palm West Home Realty.

“Inventory increasing at a pace roughly a month earlier than normal. We are seeing signs of a housing shortage with phone calls and emails from agents looking for specific criteria which are not found on the MLS. This is a phenomenon not seen since 2007. Extraordinarily encouraging,” reports Tim Moncrief of Austin.

“We are starting to see some real strong areas and price points in the hottest neighborhoods and areas of Atlanta – Buckhead, Sandy Spring and East Cobb real estate markets for 2012. All have been highly desirable areas for schools, area amenities and location. So, not surprising that Buckhead, Sandy Springs, East Cobb Real Estate would be the first to improve. Having said that, homes in these area run the full gamut of pricing and it’s at their lower price points – below 750k and below 1Million that we are seeing more of a recovery,” Michelle Francis, Buckhead Atlanta Homes for Sale & Lease.

Even Phoenix, where the Case-Shiller Home Price Index lost more than half its value from 2006 to 2010, is experiencing tighter conditions. Since January, Mike Orr, director of the Arizona State University Center for Real Estate Theory and Practice, has been predicting a housing shortage in the Phoenix market, especially in the crunch is expected to be more pronounced in the East Valley, where some subdivisions are approaching build-out and other builders are raising prices.

A growing demand and shrinking supply has driven home prices up in recent months, he said. Orr thinks that’s gone unnoticed to people who will enter the market this spring, in what is typically the peak time for sales activity.

In fact, in February the supply of houses for sale in Phoenix was down 42 percent compared to the year before. Some Realtors in Maricopa and Pinal counties are starting to call around to ask people whether they would consider selling homes in desirable neighborhoods. “Supply is tight, in a pretty extreme way, and it looks likely to stay that way for months, Orr told KPHO news in March.

“They’re going to be surprised that it’s so hard to buy a house. They’ve been hearing for so long that there’s a glut of homes,” Orr said. “They’ll go out and find there’s not a lot to choose from and every time they bid, there’ll be three or four other offers.”

So I was reading in the newspaper that now there’s a government program where I can refinance and get a cheaper rate even if I’m deeper underwater than the Titanic.  Which I am.

I called the first mortgage guy who found in my spam file on my email and he was happy to hear from me.  He told me that it was called HARP 2.0 and that I qualified since Freddie Mac owned my mortgage.  Isn’t that something? You learn something new every day.

Except there’s a problem, he said.  “You’ve been paying your mortgage on time.”

He was the first mortgage person I had ever talked to who agreed with me.  For ten YEARS I’ve been paying the mortgage on time.  When Countrywide and Washington Mutual bailed out after ripping off thousands of borrowers, I paid my mortgage on time.  Goldman Sachs and Lehman Brothers can go bankrupt , but not me.  First of the month and my check is in the mail.

I didn’t think it was fair but Felicity, my wife, said that just because those companies were bums didn’t mean we should be.  We had to set a good example.  (For who, I wondered, since the kids are grown.)  And then there’s our credit in case we want to buy something, she said.   (And you-know-who frequently does.)

So she found some government bureaucrat somewhere on the Internet who said we have a moral imperative to pay our mortgage no matter what.    He was probably the same guy who invented HARP 2.0.  Just like the government to put out a press release about a great new program and then tell honest working people who pay their mortgages on time that it’s not for them.

“Moral imperative?  You’ve got to be kidding,” I said. “There wasn’t much moral imperative going around when all those people got sold subprime loans they couldn’t afford.”

But I wasn’t worried.  I had a real live mortgage EXPERT who agrees with me.  You need to quit paying your mortgage for three months before you can get into the HARP program, he told me.  The mortgage expert said the program was for people who were having a hard time paying their mortgages.  I figured I qualified.  Writing that check every first of the month is awfully hard on me, that’s for sure.  I wasn’t alone.  He said he had lots of other customers like me who weren’t behind on their payments until they talked to him.  Then they wised up and got cheaper mortgages.  Sounded good to me, but Felicity hit the roof.

“That’s crazy,” she said.  “What happens if we don’t get approved?”

“That’s an easy one.  We save three months of mortgage payments.”

“No we don’t, you dunce. We will still have to make those payments plus interest and we will probably lose one hundred points off our credit score.  Besides, it’s the right thing to do.”

So I did a little more research about this moral imperative thing, which wasn’t very hard.  What about the government itself?  Does the local tax assessor’s office feel a moral imperative to lower your property taxes pronto when home values take a pasting?  I don’t think so.  Who cares if suffering homeowners have to keep paying property taxes for years as if they lived in mansions when Zillow values their home as if they were rotting foreclosures?  When they finally get around to lowering assessments, they raise taxes somewhere else to make up the difference-like it’s our fault that home values tanked.

“So you’re going to stop paying our taxes too?” asked Felicity.  “Good luck with that.”

Well, then I found out that there are thousands of people just like us could care less about their moral imperative.  They are walking away from their mortgages because continuing to pay them is just throwing good money after bad.  They even have a name for it.  It’s called “strategic default” and there’s even a college professor in Arizona who says it’s the right way to go.

Felicity laughed at that one.  “When we lose our home can we move in with the professor?  He probably lives in a trailer park in the crappiest part of Tucson.”

It was clear she didn’t have an open mind so I decided I would find a way to prove to her that forgetting about moral imperative now and then just isn’t such a big deal.  Credit cards came to mind.  I never could figure out what I got in return for the money I sent in every month to credit card companies so I stopped paying one of them.  As soon as the due date passed, they started calling and emailing like I was a long-lost relative.  At first they said patronizing things like “we’ve always treasured our relationship with you because we know you are a coward and pay on time.” As time passed, they got meaner.  They sent me big ugly envelopes plastered with black type that said “OVERDUE” and “ACCOUNT SUSPENDED” just to embarrass me in front of my mailman.  When they called, at first they were nice people in India with lilting accents like in Bollywood movies.  After I was 60 days past due, the robo-call machines called incessantly.  At 90 days, Felicity found out about my little experiment when her card was rejected at Kmart.

Felicity was so mad at me that she nixed the whole HARP thing and ordered me never to talk to my mortgage friend again.  So it was no surprise to me at all when I read in the paper the other day that the HARP program wasn’t getting many takers.  The article said the experts couldn’t figure out what the problem was.  How could so many homeowners pass on such a great deal, they wondered?

Well, duh.  I’m an expert homeowner and take it from me, all they need to do to make the program work is get rid of this moral imperative thing.  In fact, if Congress would just pass a law saying morality and mortgages make about as much sense as morality and politics, we probably wouldn’t have a housing problem at all.