Overbidding Increases as Housing Inventory Dwindles

Westcoe Realtors, Riverside California…According to the latest MLS statistics for the month of August, 2009, overbidding (offering a higher price for a property than the list price) has increased again for the greater Riverside area.  In August, closed sales in the Riverside area showed that 67% of all properties that closed escrow had a closing price equal to or greater than the original list price.  This percentage is up from 50% in April and 66% in July, and shows the effect of a dwindling housing inventory in the face of huge demand by buyers for homes in the Riverside area.

The actual numbers for August are as follows:  484 properties closed escrow, with 324 closing at or above the list price.  The bulk of those closings came in the price range below $350,000, where the statistics show 426 closings, with 295 at or above the list price, for a percentage of 69%.  Above the $350,000 range, the numbers drop significantly, with the closings at 58, and the number of overbids closing at 29, for a  percentage of 50%.

The reason the overbid percentage has risen over 30% since April is directly related to the government imposed moratorium that has been the subject of many blogs on this website.  These Federal and State moratoriums have resulted in a massive number of potential foreclosures that are in the “pipeline” but as of yet, have not reached the sales marketplace.  As a result, the massive number of buyers who want to take advantage of low home prices, low interest rates, and the temporary tax credits available to first time buyers are having to “outbid’ their competition for the fewer homes currently available for sale.  The end result is closing prices higher than the list price.

As for when the thousands of properties that are in the foreclosure process will become available for buyers to purchase…well, that is the magic question…and it will take a magic wand for the answer.  Between the banks own ineptitude in the administration process of their foreclosed properties, and the government regulations that are now imposed on these said banks, the answer really does require some magic to ascertain.  Until then, or until the appearance of a contemporary Harry Potter to solve this quagmire of foreclosures, we will all just wait and see…which unfortunately, is about all we can do.

Take care, and as always, if you have any real estate issues you would like to see addressed here, just let us know.