Westcoe Realtors, Riverside California…OK…so it’s not like anyone really expects our amazingly hot real estate market to cool off any time soon, but occasionally even we get surprised when we obtain some pretty revealing stats that put this high paced market into perspective.
As anyone who is trying to purchase a home at the moment already knows, the competition is brutal from other people trying to do the same thing. This abundance of buyers coupled with the alarmingly low amount of homes for sale has fostered an atmosphere of frenzy. As Realtors, we are not big fans of a market as “unbalanced” as this because it tends to frustrate just about every person involved in a transaction. However, since we cannot control it, we have learned to roll with it.
While we can tell our clients (buyers or sellers) about all of the above, sometimes it is simply easier to understand what is happening with a few numbers…and that is what we bring you today.
One indicator of how intense our real estate market has to do with overbidding. This is where a buyer will offer the seller a higher price than what the seller has the home listed for. Why do this? Because that is how a buyer beats out the other buyers who are also making offers on the same property. As in an auction, many times the home will sell to the highest bidder. We leave this up to the buyers, and every buyer has their upward limit, but overbidding has become a very normal and common practice in our market.
Well…in 2011, 60% of all the homes that closed escrow in Riverside did so at a price that was equal to or greater than the list price. In 2012, that number remained very steady at 59%…but through the month of April in 2013 (the latest month for which we have data), this percentage has jumped to 67%…and it is 69% of homes that close at a price of $350,000 or less!
Think about that. Almost 7 out of every 10 closings are at a price equal to or greater than the list price. This is astounding by itself, but when compared to last year, this “overbidding” has increased by almost 10%. What does this mean?
It means that for now, due to the low housing inventory and the high buyer demand, if you are not mentally and financially prepared to offer a seller more than the home is listed for, then you will miss out on 7 out of 10 homes you want to purchase. Again…as real estate professionals we don’t make these rules…we simply interpret them for you if you decide to play the real estate game at this time. We would prefer a more balanced market that is less frustrating, but as the saying goes “you dance with the one that brought you”. So, when in Rome…
In the end, as we all know, real estate markets come and they go. Certainly, all of us know that if we were 2009, this would be a very different blog subject. Back then, things were totally reversed…and someday, this market will change as well. However, for now, this is what we have, and there appears no sign of it letting up soon…so if you want to get in the game, you’ll need to ramp up to speed very quickly to get on board with what is happening. That may sound a little aggressive, but that’s what your competition (the other 7 out of 10) is doing at the moment. Sorry, but we have moved off the surface streets and must now travel on the autobahn of real estate.
Take care, stay patient, and thanks for reading our blog.