Jim Guido's Blog

The Real Estate Market is heating up in our area with multiple offers and over the asking price offers  are not uncommon today. Check out the article below from the National Association of Realtors:

Home buyers are unexpectedly finding more competition this spring in landing their dream home. Bidding wars are increasingly being reported in markets across the country, from California to Florida, The Wall Street Journal reports.

“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago

A closely watched survey reported Tuesday that U.S. single-family home prices declined in September. This report  highlight’s  the fragility of a market as it struggles to get back on its feet.

As reported by The S&P/Case Shiller composite index, 20 metropolitan areas fell 0.6 percent from August on a seasonally adjusted basis.

Prices in August were also revised to show a decline of 0.3 percent after originally being reported as unchanged.

The broader trend here is that it appears that home prices over the last few months continue to get weaker.

This ties in with the current consumer attitude that has gotten a lot of more negative, particularly when it comes to making a long-term commitment, such as buying a home.

The index has leveled off in recent months and analysts are hoping the market is at least stabilizing.

Also over the last year home prices in most cities drifted lower, but the plunging collapse of prices seen in 2007-2009 appears to be behind us. Any chance for a sustained recovery will probably need a stronger economy.

The  report also pointed out that third quarter prices were down 1.2 percent from the previous quarter on a seasonally adjusted basis and were down 3.9 percent from the third quarter a year ago.

Compared to a year ago, price declines in the 20 cities continued to improve in September and were down 3.6 percent after a year over year decline of 3.8 percent the month before.

The California Association has reported that California’s housing market displayed a glimmer of recovery during October as pending sales increased for the sixth consecutive month.

The number of open escrows, a measure of future sales activity, jumped 11 percent in October from a year earlier and rose 3 percent from September.

It appears that home sales are likely to be up in the next couple of months. The report states that they are  not anticipating a decline in sales but they’re  not looking for any sort of a dramatic increase.

Home sales statewide this year should be in the 490,000 range and  California is grinding through sales at a pretty decent clip.

The association’s report came on the same day that the National Association of Realtors reported an annualized sales rate of 4.97 million homes in October, up 1.4 percent from September and 13.5 percent from a year ago.

Sales in the west rose 4 percent to an annual pace of 1.19 million in October, which is 15.5 percent higher than a year earlier.

It was also reported that sales in California increased 8.5 percent from a year earlier and rose 1 percent from September to an annualized rate of 493,240 properties.

It was also noted that the conforming loan limit just went back up to $729,500, which could stimulate activity at the higher end of the market.

Another good sign is that some lenders are moving quicker in approving short sale transactions.

Sales of distressed properties also appear to be stabilizing, according to the association.

Last month, foreclosed or abandoned properties accounted for 44.8 percent of sales, up from 44.5 percent in September but down from 46.1percent a year earlier.

The number of Americans who bought previously occupied homes fell in September and home sales are on pace to match last year’s dismal figures which was the worst in 13 years.

As reported by The National Association of  Realtors on Thursday home sales dropped 3 percent last month to a seasonally adjusted annual rate of 4.91 million homes. That is well below the 6 million that economists say is consistent with a healthy housing market.

The recent housing market has been hobbled by foreclosures, weak demand and falling home prices. As reported, last years  4.91 million previously occupied homes sold was the lowest level since 1997.

First-time home buyers accounted for 32 percent of all sales which was the same as August. First-time buyers are critical to a housing recovery because their purchases of low and moderately priced homes allow sellers to move up to more expensive homes.

Homes at risk for foreclosure moved down to 30 percent of sales, from 31 percent in August. Many of the sales went to investors, who are buying homes under $100,000. Their purchases made up 19 percent of all sales last month, down slightly from 22 percent in August.

With the large number of unsold homes and foreclosures on the market it is sending prices lower and hurting sales analysts are reporting.

Many people are reluctant to purchase a home even with the lowest mortgage rates in history and that has a impact on sales figures. Many economists say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecasts don’t anticipate a rebound in prices until at least 2013.

With the high rate of foreclosures it has made re-sold homes much cheaper than new homes. The median sales price dropped nationwide to $165,400 in September from August. A new home is now roughly 30 percent higher than the price for a previously occupied home which is almost twice the normal markup.

This trend is even affecting homes that are under contract and near closing as they are falling apart at the last minute. Contracts cancellations also remained high in September, with 18 percent of Realtors saying they had at least one contract scuttled. That’s unchanged from August and a record high.

Homes sales fell across most of the country. In the Northeast, sales rose 2.6 percent. But they declined 0.9 percent in the Midwest, 2.6 percent in the South and 8.8 percent in the West.

The glut of unsold homes increased slightly in September to 3.48 million homes. At last month’s sales pace, it would take 8.5 months to clear those homes. Analysts say a healthy supply can be cleared in six months.