Overbidding Stats for May Hold Steady at 72%

Westcoe Realtors, Riverside California…According to the latest statistics from the Riverside area MLS, closings for the month of May indicate that 72% of all the properties that closed escrow during this month did so at a price “equal to or greater” than the original list price. 

This means that over 7 of every 10 closings were “bid up in price” buy anxious buyers looking to purchase a home in the face of limited supply and massive competition.  In today’s real estate marketplace, this “overbidding” is fueled by the large number of buyers who find the only way they can purchase a home is to enter into a “bidding war” with other interested buyers until the home contract for sale is awarded to the highest bidder.

This bidding is necessary due to the small amount of homes currently on the market for sale.  Many “regular” sellers are waiting for prices to rise higher so they may maximize their equity, and bank foreclosure properties continue to be held off the market by the banks desire to control when and where they will take their losses.  The net result is that there simply is not enough housing inventory for sale to satisfy current buyer demand.  Most new home builders are in the same boat as the “standard” sellers in that they too must wait until they can sell their product for a price they need to make building feasible.

The good news is that property values are beginning to rise in some areas, which will ultimately lead to prices getting to a level that attract “standard” sellers…but how long this will take is anyone’s guess.  The new, more stringent appraisal guidelines set in place over the past few years are holding prices down, with the result that the market improvement needed for builders and sellers to get off the sidelines are taking longer than expected.  However, signs are pointing to an uptick in pricing, which is generally where it all starts.

Westcoe will continue to keep an eye on the “overbidding” percentages, as a dropping trend would indicate either an increase in inventory, or a decrease in buyer demand…and only time will tell on that.  Stay tuned.