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Are you seeing this where you live? WSJ says stunned home buyers are finding that bidding wars...

Are you seeing this where you live? WSJ says stunned home buyers are finding that bidding wars are back. Unlike the big demand of the bubble years, this trend typically is driven by lower inventories of homes listed for sale, but at least a few giddy sellers are pocketing nice profits. Enjoy it while you can, housing bears say, because the market is still dismal and will remain so for a generation.
Comments (46)
  • Tack
    , contributor
    Comments (13419) | Send Message
     
    When proclamations are made that something will be "dismal" for a generation or a lifetime, that's when I know with certainty there's money to be made.
    28 Apr 2012, 10:01 AM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    Yes, the generational dismal comment is out of line. However, most in real estate understand the "bidding wars" are on short sales that are selling for 30-40% less then the already underwater neighbors. The cycle feeds upon itself as more and more homeowners become severely negative equity and eventually walk away. There's a reason why there are nearly the same number of REO's, homes in default, or homes in distress today as there was in 2009. It would be nice to say home prices have hit bottom, and perhaps in a few regions they have, but most areas will see at least another 10-15% drop to align with wages. As wages decrease, so will one's ability to afford a home. Until we see reduced unemployment, increased wages, and less short sales, we will not see a housing bottom.

     

    Don't believe me- take five minutes and preview the MLS for any of the larger regions/markets across the country. Try CA, FLA, AZ, NV and you will be surprised to see 50-60% or more homes that a selling short, and another 20-30% that are selling as REO, and maybe 10-20% that are conventional sales.
    28 Apr 2012, 04:03 PM Reply Like
  • 511southkstreet
    , contributor
    Comments (77) | Send Message
     
    Down here in Florida happened to me every time i went to buy some rental property. Finally grabbed something decent but just by sheer luck......lol.
    28 Apr 2012, 10:26 AM Reply Like
  • brachiosaurus
    , contributor
    Comments (237) | Send Message
     
    lol florida
    28 Apr 2012, 12:10 PM Reply Like
  • spald_fr
    , contributor
    Comments (2728) | Send Message
     
    511southkstreet, that's an eerie photo. You have a chainsaw in your hands?
    28 Apr 2012, 12:37 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (19420) | Send Message
     
    The housing market has bottomed for a host of reasons, including lack of credit that is now improving, household formation, etc.

     

    It's basically bottomed. Doesn't mean it's off to the races, but it should stabilize/trade at a higher level in terms of volume and perhaps even prices.
    28 Apr 2012, 10:27 AM Reply Like
  • The_Hammer
    , contributor
    Comments (4002) | Send Message
     
    And High defaulting 3% FHA loans (over 9% after 24 months) at record levels. the govt and banksters are distorting and manipulating the interest rates, phoney FHA fraud loans and supply. It is that simple. Obviously there are a few areas of the country that have been beaten down to a pulp but it was well deserved due to the massive excesses. mnay areas of the country remain at high levels historically. But do not hold your breath thinking that some price mania is coming back cuz the chief Manipulator the bernank and the govt are nearing a bubble crisis in the dollar and treasuries. THE END game is coming. This SO called HERO will be lynched when the SHTF for Normal everyday Americans (MIDDLE, POOR AND RETIREES)
    When those interest rates back up and they will and the bernank is shut down watch the F%$# out.
    28 Apr 2012, 12:03 PM Reply Like
  • KashMoneyKapital
    , contributor
    Comments (408) | Send Message
     
    depends on location... Miami may have bottom, long island hasn't
    28 Apr 2012, 12:37 PM Reply Like
  • bigazul
    , contributor
    Comments (999) | Send Message
     
    Not where I live. 12-14 months of inventory.
    28 Apr 2012, 11:09 AM Reply Like
  • KJP712
    , contributor
    Comments (449) | Send Message
     
    Buyers are bidding up the few houses that have not fallen down or are in need of repairs.Selective reporting will make pockets of prosperity appear out of the fog of reality.
    28 Apr 2012, 11:12 AM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    I agree. My hometown area has not seen any positive movement in housing prices for 20 years.

     

    Incomes never grew, area is economically depressed, and demographics shifted towards the elderly.
    28 Apr 2012, 11:49 AM Reply Like
  • apberusdisvet
    , contributor
    Comments (2885) | Send Message
     
    The biggest headwind for housing is the $1 Trillion of student debt that will preclude the presumed next generation of homeowners from even qualifying for a mortgage. The housing pumpers and shills don't want to touch this fact. Another just-as-important issue is that with median household income at $50k and falling, both the median sales price for new ($215K) and existing ($168k) are still way too high for mortgage qualification purposes; unless of course NINJA loans are resurrected.
    28 Apr 2012, 11:15 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1030) | Send Message
     
    The student debt issue will be a campaign issue to buy the votes of those younger folks involved. It is just now being bandied about by Obama and Boehner.

     

    As with any other vote buying scheme, any relief that gets implemented will be so full of red tape and bureaucratic mazes that it won't help many young adults. But it is a big issue to those that carry this student debt, so they will hand over their vote en-masse, only to feel like they were taken for fools later on.
    28 Apr 2012, 11:47 AM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1327) | Send Message
     
    You can't buy a $168k house on a $50k income?
    With a $20k down-payment and a 5% mortgage rate (so higher than most), the monthly payment on a 30y fixed is $740, compared to $4,166 monthly income.
    I own a rental property in suburban MD. House next door hit the market on Saturday and went under contract in the course of the week. I don't know whether there was a bidding war, but the seller sure didn't need one: just needed to sell it once and he did it in a matter of days.
    29 Apr 2012, 12:18 AM Reply Like
  • Ray Lopez
    , contributor
    Comments (1526) | Send Message
     
    MD or DC or northern VA has held up nicely--thanks to tax money from the rest of the USA. AZ, CA, NV, FL are different stories.
    29 Apr 2012, 03:55 AM Reply Like
  • phxcrane
    , contributor
    Comments (416) | Send Message
     
    The fools are us for lending them money for degrees a lot of them will never use. And a lot of them will never even get a degree. Give money away and people will take it. Higher taxes will pay for this boondoggle.
    29 Apr 2012, 10:13 PM Reply Like
  • Tao Jaxx
    , contributor
    Comments (1327) | Send Message
     
    My point is the difference across time, irrespective of the cross-regional differences.
    The DC region has indeed held up better than puffed-up real estate in the scorching desert boonies, for obvious reasons: not only government and lobbying but also the presence of top level academic institutions, as well as that of numerous life science and high-tech companies .
    My point is that the same house over the last four years would have sat on the market for weeks and most probably months. Now it went in a couple of days.
    That tells something about the real estate situation.
    Bears typically hibernate and easily turn into perma-bears. Even big crises at one point abate. Perma-bears miss that point.
    30 Apr 2012, 02:48 PM Reply Like
  • BruceInKY
    , contributor
    Comments (429) | Send Message
     
    I'm seeing "Short Sale" appearing on the yard signs in some very resilient suburban neighborhoods...not talking about recent McMansion developments, but well-established, very desirable locations.
    28 Apr 2012, 12:17 PM Reply Like
  • bbro
    , contributor
    Comments (9738) | Send Message
     
    Well let's see... to quote from the article...
    "According to Ned Davis Research the ratio of median home prices to median household income is still about 5% above the 36-year mean."

     

    36 year average of the 30 year mortgage rate is 8.82%...30 year
    mortgage today is 3.95%
    28 Apr 2012, 12:24 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    Good point. Regardless, we know housing is what the Fed is targeting more than anything else, so it is encouraging to see that their efforts are having an effect.

     

    I think the Fed will risk significant inflation to see housing return to some semblance of normalcy, especially where debt ratios are concerned.
    28 Apr 2012, 12:53 PM Reply Like
  • Joe Dirnfeld
    , contributor
    Comments (1128) | Send Message
     
    House hold formation, tight rental market, declining inventories, improving employment, and low new construction will eventually turn the thing around.
    28 Apr 2012, 12:46 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (19420) | Send Message
     
    Exactly, no point in saying housing is going down, etc. Housing is stabilized and going up. One should try to be realistic so that one gets a better understanding of the overall developments.
    28 Apr 2012, 01:04 PM Reply Like
  • J 457
    , contributor
    Comments (951) | Send Message
     
    Paulo- you are speaking too general. I can show you areas where housing is down 70% since 2006 and its still dropping. Yes you can cherry pick a few solid markets, but many markets are still struggling. Overall housing is still a major drag on this economy- otherwise why would over 5mm homes be REO/NOD or delinquent?
    28 Apr 2012, 04:07 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (19420) | Send Message
     
    Yes, the RE market is local, that can happen. I am talking in general terms.
    28 Apr 2012, 04:27 PM Reply Like
  • daro
    , contributor
    Comments (1577) | Send Message
     
    and cost of ownership in some places is lower than renting.
    28 Apr 2012, 08:24 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    A bidding war is not hard to create for realtors. Just call in a couple of friends.
    28 Apr 2012, 12:51 PM Reply Like
  • Ananthan Thangavel
    , contributor
    Comments (836) | Send Message
     
    The bidding wars are back, but they never really left. Judging from the properties I've looked at, there seems to be a very clear delineation in current housing inventory: delusional sellers and realistic sellers.

     

    The delusional sellers have their houses listed at least 10-20% too high, and, not surprisingly, their houses have been on the market for months. The realistic sellers (or motivated ones) have their houses listed BELOW market prices. This in turn drums up plenty of interest, and creates the aforementioned bidding war in which the listing price is sure to be exceeded. This doesn't mean that prices for houses are suddenly rising, it is just a sales tactic that is gaining popularity, and it does work.
    28 Apr 2012, 01:09 PM Reply Like
  • daro
    , contributor
    Comments (1577) | Send Message
     
    the banks like to do that trick
    28 Apr 2012, 08:25 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2458) | Send Message
     
    Late Spring is peak buying season. Homebuyers are ignorant buyers. Realtors are crafty and thrive on limiting information available to buyers/sellers. Economists are dismal scientists. Journalists like to write stories that appeal to readers.

     

    Put all of this together and you have a story that will be forgotten by winter.
    28 Apr 2012, 04:14 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2458) | Send Message
     
    The real estate market varies widely across the country. "The market has bottomed" might be true for some regions AND at some price points within a region. It's not likely in other areas or neighborhoods with little sales action. In aggregate nationally, it's speculative to talk about a market bottom.

     

    Where I live there is no bottom. I have an acquaintance who just lowered his listing price 20% because there was not one serious inquiry about the house at his initial listing price for 60 days. The bottom-end houses nearby are being bought at a reasonable pace.

     

    It's not a normal market by any means. It's a speculative market in the aftermath of a crash.
    28 Apr 2012, 04:26 PM Reply Like
  • Paulo Santos
    , contributor
    Comments (19420) | Send Message
     
    There are places like Detroit that haven't seen a bottom in decades and where you probably can get paid to buy a home ... :-)

     

    But I'm talking in general.
    28 Apr 2012, 04:28 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2458) | Send Message
     
    Thankfully, I don't live in Detroit, but some of those beautiful old $60,000 houses are incredibly cheap--if you don't mind carrying a gun on your way to the market.
    28 Apr 2012, 04:35 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (2458) | Send Message
     
    Fact check: I just noticed that the article focused on several of the (few) hot markets in the USA. To imply that these areas represent the country is shoddy reporting. Let's see:

     

    Palo Alto: Lots of Internet Bubble 2.0 temporary wealth

     

    Washington D.C.: Government and lobbying is still a growth industry

     

    Scottsdale and Southern California: Places with a realtor on every block--most of whom got their licenses so they could flip homes back in the bubble days.

     

    In Southern California back in 2004, if you were broke, uneducated, unemployed, and lazy, you soon became a successful realtor or a mortgage broker.
    28 Apr 2012, 04:52 PM Reply Like
  • Ricard
    , contributor
    Comments (3829) | Send Message
     
    Agree that most of the article was rather fluffy. The one key quote that made it "relevant" to the US as a whole is sourced from the NAR, another dubious quality:

     

    "An index that measures the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago and 4.1% from February, the National Association of Realtors reported on Thursday."
    30 Apr 2012, 12:18 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3530) | Send Message
     
    Not one mention in the comments about shadow inventory. Who knows what properties lurk in the, "I'm just waiting for the market to strengthen before I put my house up" hearts of owners.
    28 Apr 2012, 06:19 PM Reply Like
  • jmjjmj1
    , contributor
    Comments (162) | Send Message
     
    definatelt seeing homes, not on short sales getting scooped up here in the NW in a week or less, and yes some bidding wars on houses that quite froankly seemed overpriced to me.
    28 Apr 2012, 07:04 PM Reply Like
  • GD
    , contributor
    Comments (680) | Send Message
     
    Just sold in RI. 5 cash bids at asking price. All resubmited a new bid, at 10% higher. I like it!
    28 Apr 2012, 08:58 PM Reply Like
  • dieuwer
    , contributor
    Comments (2405) | Send Message
     
    I have decided that IF I ever buy a home, it would have to be in a non-recourse state.
    28 Apr 2012, 09:50 PM Reply Like
  • Tack
    , contributor
    Comments (13419) | Send Message
     
    Just remember, if you ever do that, you have to keep that initial mortgage forever because virtually all non-recourse provisions apply to "purchase-money" mortgages only, which means any modifications or refi's aren't within those protections.
    28 Apr 2012, 10:51 PM Reply Like
  • Lakeaffect
    , contributor
    Comments (1030) | Send Message
     
    I hope things are righting. Enough blathering about the politicians. Now, can we get a decent interest rate on our savings?
    28 Apr 2012, 10:18 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    Decent interest rate on CD's means a higher mortgage rate.

     

    The problem with these low rates is that it sets the stage for the next big problem.

     

    When rates rise who is going to want to hold a 4% mortgage for 30 years if their cost of funding is 4-6%?

     

    That is what partially doomed the S&L's. They were forced to make mortgage loans at 5% when the cost of funding was at 8%.

     

    These bonds will get slaughtered when rates rise.
    29 Apr 2012, 12:45 PM Reply Like
  • Ohrama
    , contributor
    Comments (514) | Send Message
     
    The bidding does not mean the real bottom is achieved. In life, most are sort of under-damped (using system theory technical term) implying prices swing to the extreme, make smaller and smaller minimas and maximas before settling on some nominal value. The problem here is we might have had some feel for the nominal value under normal (recessionary) circumstances.. But we are now living in a very distorted US economy (Fed intervention, our own structural problems, awakening of the rest of the world etc.) and no one can say for certain what that nominal value will be. If you made money in the interim, just thank your luck (remember the big things in life like where we were born etc. are not under our control!)
    28 Apr 2012, 10:21 PM Reply Like
  • Regarded Solutions
    , contributor
    Comments (16430) | Send Message
     
    when nobody wants to lend, everyone wants to buy.....its never been any different. Housing will recover, be healthier, and the cycle will start over again.
    28 Apr 2012, 11:45 PM Reply Like
  • Mark Selzler
    , contributor
    Comments (27) | Send Message
     
    Rest assured, the majority of these "buyers" do not meet the criteria of a healthy housing market. Home prices in many areas are now low enough that "those who have" are now stepping in for investment purposes before speculation drives prices higher. Our young people seem forever destined to remain in the rental trap until Mom and Dad throw them a bone down the road, (if they're one of the lucky ones). As previously stated in this thread, applying for a loan that demands no more than a maximum 40% debt to income level will prohibit most of our younger generation from purchasing. These kids accumulate too much (early) debt, and/or earn far too little to qualify.
    29 Apr 2012, 10:23 AM Reply Like
  • laporte
    , contributor
    Comments (15) | Send Message
     
    In Tampa, our grandchildren went looking for a home to buy and couldn't find a decent "short sale" or "foreclosure" to bid on. Therefore, they had to look for a home the old way...and, in doing so they had to get into a bidding war for the home they decided on. They will close on said home this next week, and they are thrilled to get it!

     

    In southwest Florida where we live (Naples, Bonita Springs, Estero), the inventory of homes for sale is dramatically decreasing with each month that goes by, and the prices for homes are going up substantially with each month that goes by.
    29 Apr 2012, 12:36 PM Reply Like
  • The_Hammer
    , contributor
    Comments (4002) | Send Message
     
    In Tampa--St Pete lots of those higher end houses sit empty and are not be foreclosed on. shorts sales are a joke in that the banks want to recoup their losses but ain;t going to happen. So lots of losses to be taken. as for price increases good luck with that as incomes stagnate and living costs soar. Something has to give and it is housing.
    In the next few years as food , energy, insurances and healthcare costs consume greater portions of disposable income housing will feel the pressure.
    The cost of maintaining these water (bay, canals) boat access houses pretty expensive. Insurance is like $4500 and taxes are like 8k. Add up the numbers just for property taxes and insurance 12,500 a year. Nothing special house. This on a house on the water asking like 400k probably worth 325k-340K.
    30 Apr 2012, 10:06 AM Reply Like
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