Real Estate Blog - So What's Up With This Market...For Real or Not?

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So What's Up With This Market...For Real or Not?

Have we turned a corner, or is this just another blip in the real estate radar? So Cal Real Estate

Today was another typical day in So Cal real estate in the first-time buyer price range. I began working with a couple last week-end, a CRS (Certified Residential Specialist) referral from another state. They've been renting here for a while and decided it was the right time to buy, and they are obviously not alone.

Last Saturday was the first time we were out together, we viewed eight homes, they narrowed it down in their minds to two of them. Their first choice a 1950's home had room addition issues, two unfinished rooms and no building permits. There was also a question about another add-on room and whether or not it had been permitted years ago. They wanted to speak with their contractor friend prior to submitting an offer. As their agent, this sounded completely normal to me. They called me the next day with questions, I called the listing agent and to my surprise it sold the night before with 10 offers, with apparently no questions asked.

Nest I called on the second choice, newer construction in a PUD, after receiving eight offers the seller decided not to sell after all.

*******************************

Fast forward to today, great four new properties (yes only 4 homes in their price range in four different cities) that were non- short sale listings and here are the results:

1. $399,000 - single family home has five offers, owners not making a decision until next week. Who knows by then the offers will double.

2. $390,000 - patio home, 1 offer, but good, it's still available so we can view this one.

3. $399,000 - single family home, 14 offers according to the agent (listed 2 days) and of course over asking price including a 40% & 50% down offers.

4. $379,000 - townhome, ah ha, this one is still available and NO offers, what's up? You guessed it, appointment only with the agent who is just too busy to show it. (I don't even want to get started with my opinon of this one.)

This is the second time today I've experienced this scenario when looking for properties to show. In reality, it's been going on for a couple of months, almost every transaction has been a situation of multiple offers on both sides, listings and sales.

So my big question is, what's going on?
Please tell me, are you experiencing the same thing in your market?
Have we rounded the corner, is consumer confidence improving?
Is it supply and demand because lenders are holding off on flooding the market with large numbers of REO's?
Is it the $8,000 tax credit?
Or are we experiencing the early stages of housing recovery?

I'd love to hear from you.

Posted by Orange Co. Real Estate~Lynda Eisenmann, Broker-Owner, CRS,CRB,GRI,SRES, Brea, CA on 07/31/2009 06:47 PM

Comments (56)

real estate recovery, consumer confidence up

Originally posted at: So-Cal Living: So What's Up With This Market...For Real or Not?

56 Comments on So What's Up With This Market...For Real or Not?

JUL

Lynda - I have had similar experiences with my buyers, and I think your list of responses at the end of your blog are very accurate. It is a combination of these things in my opinion. I do believe consumer confidence is improving along with the tax credit, and that the buyers want to take advantage of this market.

Hi Sharon ~ Since we're almost neighbors, I'm not surprised, although it makes me wonder what's going on in others parts of the country.

Lynda, The only time that happens here is when the house is priced very competitively. I recently did beat out 8 offers for a client but the home was priced very good and we made a good offer.

Lynda that is not quite the case here, multiple offers mostly on foreclosures. Sounds like your market is bouncing back

AUG

Hi Lynda, I have found that what you're experiencing is happening here in the Corona area as well and along the 15Fwy corridor all the way down to Temecula. I think it is a combination of all of your points, but I beleive that there are enough buyers now that when the foreclosures are released to the market they will sell quickly and THEN we will truly be on the road to recovery. A nice, steady, well paced recovery. Yippee!!

AUG

Hi Marchel ~ Interesting and I can see that's happening for that reason when it comes to pricing. Here it's pretty much a function of the availability in the entry level housing. Anything in near the $500,000 range is moving, if it's under $400,000.

Jennifer ~ Got it thanks.

Debra ~ I agree.

Lynda We are seeing multiple offers on

short sales
foreclosures
well priced homes

Karen

AUG

Lynda--Our market is similar on what is being seen in Jennifer and Karen's markets...Multiples on foreclosures and well priced homes. Has been happening since spring. (But our first time buyers are looking at $175,000 and under homes too.)

Our market has shown definite improvement this year! I've been doing the research myself, and posted bar graphs for each city, dating back to the year 2000. This shows the entire incline and decline. I'm hopeful that this is a permanent change. But all we can do is watch and see. Oh, and we're are NOT seeing the multiple offers like you are! I wish we were!

AUG

Lynda it sounds like certain segments of the market in your area have really begun to turn around! It is great hear:)

You said it exactly right. I'm also down here on the coast and have been seeing this for about a month now, very heavily.

I called Friday night to set appointment for Saturday morning - great. There are all listings that came on the market within the last 1-2 days. Checked the MLS early Saturday for any new listings and see that 3 out of the 5 are already pending or backup (Short Sales), called the other 2 and they already have multiple offers, over list price, but the agent is keeping it active for a week.

What really upsets me is when I can't get ahold of the agent for any questions, or because I know my client wants to put in an offer and I want to see if they already have offers. I called one agent on Saturday to let her know that I had an offer for her and I would like to present it to her, so where should I meet her. No answer, no answer to email, no one in her office knows where she is??? I finally email it to her and get no response. I see that the lockbox has been taken off, but it is still showing as active. 3 days later, I see that it has gone pending. Since I still have the original MLS listing, I called the owner.......was told that they received 5 offers within hours, $65,000 over list and this in a complex where the property was already about $40,000 over the last sold.

My clients have all been so well prepared, especially down here, that they have everything ready to go, all docs are drawn up and we just write the offers there at the kitchen tables. They know the odds of them getting this one specific home could be slim since they are selling as fast as they are listed, the good ones anyway.

I'm in the Charlotte North Carolina area and have about 10 listings, although the market is up a little here it's been the worst since I been here in 9 years. Things are moving so slow I have had to look at all my options for financial security. I live in one of the most prominent locations in Charlotte called Lake Norman and some of the greatest looking homes for the money. To be honest it is to slow for me. If the president would get off this health care kick and back to the economy we would be well on our way. We need another actor in the White House.

Hi Linda!

Wow how frustrating for you as the buyer's agent and for your clients and exciting if you are the listing agent. Here in Cincinnati, OH we don't see that many multiple offers except for short sales, foreclosures and "fire sales".

Ww are seeing an increase in sales each month which is promising.

Brenda Swigert,e-PRO

ReMax Unlimited West Chester, OH

513-378-1461 direct

www.BrendaSwigert.com

My market is Clermont, Fl near Orlando. We are extremely hard hit with under water home mortgages, short sales and foreclosures, all caused by the over the top demand for homes during 2005-2007 which were priced sky high, and have mortgages with ARM rates that are now unaffordable. You know the drill, yadda, yadda, yadda.

I think that the new and increased demand is being fueled by first time home buyers, who can now purchase these homes, as the market value is at 2001 prices, and there is an urgency to purchase and close before Nov.31. We are seeing a definite increase in investors getting back into our market. They are often causing a first time home buyer to loose out on a short sale, or REO because they are offering cash and the lenders love cash! Investors in our market was what caused a huge part of of our problems during 05 - 07, when they were buying everything in sight and then flipping or holding out for much higher prices. A lot of them got caught holding the bag, when the market fell apart. We don't have what I would consider a normal market. 90% of our home sales are short sales or REO. I think that the jury is still out as to whether this is sustainable for the long run.

We build energy efficient homes for first time homebuyers. Over the past couple of months, we've been seeing multiple offers on every home we've sold, as long as we've priced it to the market or slightly under. Getting under contract is not the problem - THE PROBLEM IS GETTING FINANCING FOR THE BUYER AND CLOSING THE DEAL. Financially and creditwise, our buyers are stronger than ever - GREAT CREDIT AND MONEY FOR DOWNPAYMENT/CLOSING COSTS. But I have had all of the following happen this year to our buyers:

-- Lender changed underwriting criteria and tossed out everything in the pipeline that did not meet the new criteria.

-- Local and state downpayment assistance programs becoming more and more strict (government oversight is increasing, and these folks are not going out on a limb for your buyers. They value their jobs, so I guess I can't blame them.)

-- Mortgage wholesaler losing charter with Fannie, Freddie, etc and no longer funding new loans (they tell us this two days AFTER a scheduled closing. Thank goodness for the local bank that originated the loan stepping up to the plate with alternate in house financing.)

-- Contract to closing period is getting LOOONGER. There are a lot more FHA loans being originated, and the paperwork has to be immaculate. Patience is the name of the game as you submit, then resubmit, then dig up extra documents you didn't know you needed.

-- APPRAISALS - this has been covered and covered some more on AR, so I won't rehash it here - just search for posts on the HVCC.

So if your buyers lose out on the first round of negotiation on their dream home, and they aren't in a hurry to close, they might want to hang around with a backup offer for a little while. Who knows, the original deal might fall through, and they can swoop in and make a play.

In the southwest suburbs of Chicago we are only seeing multiple offers on foreclosures and some short sales. I have some properties that are the lowest non-distressed price in the area or complex and there are hardly showings (especially condo listings).

Great Interest Rates! Dwindling Inventory!! Multiple offers!! There are even good buys at the $150,000 - $170,000 range!! Clark County Washington has been experiencing multiple offers all summer. Our home inventory is dwindling. In January there were 21 months of houses just sitting on the market ready to be purchased. In June, there was only 7.9 months of homes to choose from and now in July there are only 7.3 months of homes to purchase.

Hi Lynda,

I'm experiencing the same thing in the entry level to mid-range homes. Higher end homes are still taking a while to sell.

The one thing no one has mentioned yet is that when listings go into multiple offer situations, they often sell for over comps. That's great EXCEPT that the property has to appraise in order for most buyers to get a loan. With all the new rules, appraisers are being very conservative and may not know area specifics. I lost a deal this summer when my client offered full price in a multiple offer situation, our terms were accepted, the house appraised, but the desk review cut the appraisal by $40k. What buyer is willing to pay more than appraised value? Of course the Seller didn't want to lower his price, and went back on the market.

I also just closed escrow on a home that once we lowered the price, we received multiple offers and brought the price back up again. Sellers were biting their nails, but the appraisal came in at value and all worked out fine.

It certainly seems as if we're coming out of it, at least up to the $729000 price range. We started to see signs of improvement as early as January with multiple offers, and currently have only 1.8 months of inventory. California plummeted first (I'm in Northern CA, Bay Area), so likely we'll see the recovery signs sooner. This state has always lured folks here - jobs, variety of landscape and let's not forget the weather! The low prices make that attractive for people who just couldn't justify those high home prices before. I asked a variation of this question on my blog a couple of weeks ago.

http://activerain.com/blogsview/1174706/have-we-turned-a-corner-is-it-now-a-seller-s-market-

Who knows what the future holds thought?

I am seeing this all over the place. It is hard for the first time FHA buyer to get a home.

Hmmm... On the opposite coast, we are busy with first time home buyers. I would not say we are seeing a lot of multiple offers, but it definitely has picked up.

In certain neighborhoods on our island we're seeing the same. Lower inventory...multiple offers.

CA is crazy, I have never seen anything like it. There is so much competition and it drives up prices and most of the offers are from speculators who are often paying close to retail. If a property is listed on the MLS in CA, it is usually too late to get a deal where the numbers make sense. I consider 50-70% LTV, strong cash flow and multiple exit strategies as deals that make sense. You can find these types of deals all day long in the MidWest and do not have to deal with 10 offers in 2 days way above what you are willing to pay. A lot of people will make a lot of money, others will lose in miserable fashion. It seems like luck to me, not good sound business practice. And this is coming from a guy who lives in San Diego.

Hi there,

You all have interesting comments, I'll need to catch up shortly.

Hi Lynda, Wow, your market seems to be on fire ! Lots of pent up demand waiting for us.

It is slow here. Mineral Wells is not a wealthy city in Texas so we don't have a lot of buyers right now even with the $8000 incentive. Most of the problems that I see are buyers who can't meet the current FHA guidelines...credit scores and down payment. Last month I was lucky enough to have one cash deal and another commercial go through.

Too many people still remember being able to get a loan with no problem and still think you can do that. They say "oh, my credit is good" and then are confused when they find out that their credit is not good. Patience is the name of the game here right now.

Here in Ca. Specifically, the Inland Empire/San Bernardino County, the pricing trend line data still reflects a downward pressure on prices. If you had purchased a home here, back in Feb, Your home would now be worth approx $18K less. To add insult to injury, most all of those buyers had virtually no $ on the table to protect themselves against equity losses. The frenzy that is in the market right now is solely based on what I see as FALSE OPTIMISUM! The worst, in my opinion, is yet to come.

Reading your posts and seeing how many refer to half a million dollars as "low priced" still boggles my mind. Here in our corner of North Idaho only the most elite properties would go for those prices.

When I quit selling real estate at the end of 2005, our really high priced properties were in the $300,000 range. They went up the next year, but from what I can see, they're coming back down again now.

My copywriting clients are all in different parts of the country and it's really interesting to me to see the variation in markets. I'm hearing that the market here in our area is still crawling.

Marte Cliff, Real Estate Copywriter
www.marte-cliff.com

I'm in Las Vegas market and we've been having the same issue for months now. The problem is primarily in shrinking inventory. The banks are not releasing houses on the market as they have used to do, they are holding them on to raise the prices. They are quite successful in doing that. There are constantly multiple offers on properties and everything is selling higher than the listing price. ON average I'd put 10-15 offers for my clients before we'd get accepted anywhere. Cash is still the king, FHA is still at the bottom of the food chain.

Another stimulant is the $8,000 credit. People are excited to buy and will be buying for now. However, what's going to happen after December 1st, I"m not sure.

San Diego is going through the same as Orange County. I worked with a buyer for a year trying to find a property in the $150k range, which, believe it or not there were quite a few! Every time she found something she liked the agent informed me that there was multiple offers and currently at over asking. My client made very strong offers, over asking price, removed termite and most everything else and STILL could not get accepted. There are a lot of investors with cash that are buying these condos which is putting a damper on the first time FHA buyers.

I think the positive press that the media has been throwing out to the public regarding the market improving has definitely helped sales improve over the last month.

I'm betting we're quite a ways from the bottom. Unemployment figures don't tell the real story. 5/1's and 7/1's from '05 and '06 due to re-set with diminished property values.

Banks in the odd position of wanting to dump their inventory but if they fire sale this wave they diminish the value of the next wave.

All we need to really bottom out is income tax and cap. gain tax to jump up and then we'll all know what the bottom feels like!

If you walk seven miles into the woods, it's a seven mile walk back out!

I work in Bastrop County, just outside of Austin, Texas. I don't know that we are seeing the multiple offers like you, but we definitely have a shortage in the $130K - $170K price range. (Yes that is the price of a 3/2 1300-1800 sq ft house). This is the price that most of our first time home-buyers want to be in and we just don't have much to show. On the other side, if one does go under contract we have to worry about appraisal because of the previous foreclosure and low sales price bring the appraisals down.

Hi Karen & Teri ~ Thanks for the info. In our area of SoCal we're seeing multiples on just about everything that decent (and some that's not) under the $500,000 range, especially on repos. It seems some of their prices are so artificial that they're being bid-up once again.

Hi Lisa ~ I've remembered reading your market posts for a few years now. As for multiples I think it relates to the supply. We're at a little over 30 days inventory right now in my city.

Bill ~ After reading your market updates for a while I'd think yours has been pretty steady for some time.

Cyndi ~ You are so right, "What really upsets me is when I can't get ahold of the agent for any questions" it's happening to everyone of us out there. Another listing yesterday said "DO NOT CALL" can you imagine?

Hi Estate & Homes ~ You live in "one of the most prominent locations in Charolette" and have 10 listing of your own, we have 66 available in our entire city of 40,000 residents. I hope things get better for you.

Brenda ~ Sounds like it's picking up some.

Hi Bill ~ It's seems that way because we have such little inventory in our immediate area.

Carolyn ~ You mentioned FHA, we're sure seeing a lot of more that in our area now. Two out of three of my last closings were FHA.

Matt ~ You could be right. For us I think it's more a matter of limited inventory and only about 4-5% of those are REO's in my little city. The OC Register just did a story on pricing saying our prices actually rose the past few months. However I'm sure there's another report that would say the opposite.

Debi ~ Your yada, yada, is right on. I'm surprised that investors are beating out first-timers. As for 90% of closings being REO's or short sales, that's amazing.

Judi ~ Sounds like you still have a lot of inventory.

Hi Tamara ~ I've read your examples (and looked at your location of NC) and we've had similar experienes in our office, it's like the wild-wild west out there when it comes to loans. Each and evey transaction today seems more difficult than the last.

Marte ~ Your comment on pricing makes sense to me. I certainly don't conisder that low-end at all, it's just the price range that's seeing the most activity. Our median range in my office was $637,000 in 2005 and has decreased each year since. I track monthly and yearly, 2008 $417,000.

Jill ~ Those are some amazing stats for WA. From 21 months of inventory to 7.3 is less than a year? Is it that way in most of your state?

Hi Marina ~ I've head a lot about the increase of activity in Vegas. Although I'm not so sure lenders actually want to hold on because of pricing, In reality I think it's more of a matter of being forced to do more work-outs (and prove they tried) under Obama's plan. It doesn't seem to make sense to mne for them to have non-performing assets on the books any longer than necessary, which in turn becomes more costly in the long-run.

Southeast Florida, north of Fort Lauderdale about 25 minutes, we've been consistently busy for 5 months....Sold more this year than we did all last year.

Multiple bids in the under $200,000 market for single family. Condo's a pain because many Buyers want FHA and many of the buildings are not FHA approved.

Short Sales and Foreclosures plentiful, but moving. Short Sales seem to average 4 months to close, foreclosures a little quicker, but they come so Lien loaded, that has its own challenges.

Hi Teri ~ Your "just closed escrow on a home that once we lowered the price, we received multiple offers and brought the price back up again" yep just heard a similar story from another agent a few days ago. If it does sell reduce the price, then it gets bid up with offers. As for appraisals, yes we're all having those issues.

Karen ~ Not surprising to me, although your range is a little higher than ours. Maybe the tech jobs in your area are back?

Debbie ~ You're right, some of the FHA buyers are being left behind with those who have more cash, yet there are many times I'd personally rather work with FHA then all the last minute changes in some of the conventional programs.

Hey Gene ~ Interesting and you're in a pretty high end market in beautiful Contra Costa Co.

Margaret from Maine ~ Seems to me like first-timers are driving the market in many different areas and that's always fine with me. It helps some enter homeownership for the first time and those sales help drive those who want to move up.

Aloha Sally ~ I'm not surprised at that either. I'd also imagine you don't have very many REO's yet probably a lot more short-sales. That's true in my immediate area.

Ryan ~ Yep at times CA is nuts, I've lived here for decades. Your bio looks like you're in Ohio, but you mentioned S.D. Did I read that incorrectly?

Linda- Yes, I agree with your assessment! Just this morning I read yet another article today reporting similar statistics for California in general:

http://realtytimes.com/rtpages/20090813_summer.htm

I love Realty Times! Accurate, deep, rich, short, concise real estate news reporting with video newscacts weekly right on their home page. I even put the link on my website: http://stagingbygina.com because I want my clients to know I support accurate, up-to-date information. You might think that's a little overboard for a Home Stager, but I want top-producing agents to understand I am qualified for their team of marketing services.

Hi Pete ~ You know I think some of the folks with the 5/1 & 7/1 ARM may have bailed already. I hope I wrong about that, but I'm not sure.

Caitlyn ~ From what I've read the Austin market remainder stronger longer that most. When it comes to appraisals, yes we've all had issues.

Linda,

Multiple offers are the biggest headaches. I've written offers from Upland all the way to Hemet these past couple months and see the same thing from $100,000 to $500,000. I submitted an offer on a home in Rancho Cucamonga last month $20,000 over asking, 50% down, with a Wells-Fago pre-approval and was beaten out. I just try to keep my buyers calm and my prospective clients informed to what they're getting into.

Hi, It has been slow for me also. Just trying to hang on! thanks for sharing!

AUG

You're right about that....inventory got low though...it's turning....definitely multiple offers!

WOW - all these markets with multiple offers! Things are heating up in other parts of the country - hope we see things picking up here in the NC mountains soon. The majority of our buyers are Florida folks who are still trying to sell homes there.

AUG

Our St Petersburg market has homes selling - when they're priced well. Many agents underprice their short sales, and generate multiple offers - which isn't to say that the bank will accept them. There's still a large inventory, but there are certainly opportunities.

Hi Lynda,

We are seeing this type of activity on the entry level while the upscale homes continue to sit...

AUG

I wish! We've had multiple offers on really well priced REO's below $225 I would say. In my area under 250K is 75% of the market. No 'move up' buyers yet over that price range. These seem to be all first time buyers with nothing to sell.

AUG

Properties under $500,000 are getting multiple offers down here, at least in my farming area they are. I've read that the experts here say that the San Market hit bottom either in January 2009 or March 2009. I vote for January 2009.

AUG

Colorado Springs has been identified as #3 in recovering markets. I am not an agent, but this kind of thing is not happening here. Houses are selling, but not with multiple offers....did you say "too busy to show it?" Seriously? If the homeowner got wind of that...oh my...

AUG

Lynda-

The under $500K (many first time Buyers) in San Diego is moving very quickly and inventory is not sitting around. Multiple offers and cash offers are plentiful. This is very encouraging, and signals all of what you said: consumer confidence, a turn-a-round and the $8K credit. I smell 'r-e-c-o-v-e-r-y"

AUG

Mario ~ Looks like this is going on in the i.e. too.

Ginger ~ You know I would have thought NC would have picked up by now.

Aloha Sally ~ Not surprised one big in beautiful HI.

Katie ~ Looks like you are Ginger are in similar situations, both in the same state.

Sharon ~ Still large inventory there in St. Pete, we're just the opposite.

Kaye ~ Same here, entry level it hot.

Lyn ~ Our REO's (for sure) have multiples. We're actually seeing far more short sales than REO's in my area of Orange Co.

Hi Jim ~ Jan. huh? Our first quarter was off somewhat, but now, more inventory at that time. However much, much lower now.

Ms. Design ~ Yes, some agents are just too darn busy to even return a call. We're seeing agent comments like, "don't bother calling, we too busy to call you back..." I only wished their sellers knew that.

Hi Deborah ~ It's our under $500,000 range too. The other day we expected to be one of seven offers, turns out we were once of seventeen. My buyers offered over but didn't get it.

Thanks to all, I've found your comments very enlightening.

SEP

This has been going on in the Silver Lake and Los Feliz market for several months now. Apparently listing agents decided the best way to compete in this market is to price listings under market value. I've actually had agents tell me "I'm pricing it at $499K but I want $600K" and they are getting it or at least close to it!

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