Multiple Offers on Bank Owned and Foreclosures
It seems like the people who were on the sidelines are now coming out and buying. A recent foreclosure was listed at $230K a little below market value and received 18 offers within a week. The accepted price, however, was $290K. This goes to show how this strategy of pricing low works well for generating activity and ultimately a higher price for the seller.
For the buyers, it seems like those who continue to wait and expect a further worsening of the housing market may be left behind. The fact that multiple offers are coming in on several of the homes now shows that the competition is fierce here in the Los Angeles and San Fernando Valley area.
According to Southland Regional Association of Realtors, "There were 6,950 active listings throughout the San Fernando Valley at the end of July, down 3.4 percent from a year ago. Of that total, single-family homes accounted for 75 percent of the active listings. At the current pace of sales, the active inventory represents a 7.5-month supply - slightly higher than the 5- to 6-month supply deemed to represent a balanced market.
By comparison, the inventory during the recession of the 1990s hit a record high of 14,976 in July 1992 and the inventory compared to pace of sales was three-times higher at a 23-month supply. Contrary to an inaccurate public perception, the active inventory in the San Fernando Valley has been trending lower since November 2007 when it stood at 7,505."
This reminds me of Economics 101...supply and demand equilibrium or efficient market theory. I believe that we have at least found some equilibrium or at least the return of an efficient market. Great news for everyone!!!
However, everyone wants to know..."Have we reached the bottom yet???"
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Jason - I couldn't agree with you more about the direction that this market is going and buyers who wait, especially here in the SFV. Just recently, I've had to speak with a couple of clients about how much time and money they have wasted in trying to "get a great deal" by low-balling some short sale and/or REO. These particular clients are perpetual low-ballers who simply refuse to make a competitive, fair market value offer because of something they read on the internet, written by someone they don't know and have never met or spoken with, who lives and works in another area and/or state.
They, of course, think that prices are going to come down even lower, and maybe they're right. However, by the time that happens, rates will have increased to the point that it won't matter that they bought a cheaper priced home because now they're going to pay more for their loan. Penny wise and pound foolish!