July MLS Statistics for Riverside Still Show Tale of Two Markets

Westcoe Realtors, Riverside California…According to the July MLS statistics compiled for the Riverside area, the resale housing market is continuing it’s dichotomy of two distinct selling markets.  For all properties that closed escrow in July with a sales price at $350,000 or below, 68% of those closings occurred at a price equal or greater than the original list price.   For homes above the $350,000 list price, the rate of “overbid closings” drops to 48%.  These percentages essentially mirror the statistics from the previous month, which were 68% and 45% respectively.  Overall, when combing all sales for July, the rate of overbid closings was 66%.

The reason for so many properties closing at or above the list price in the lower price range continues to be a reflection of the current supply and demand factors for the Riverside area.  Housing inventory is down substantially due to the California imposed foreclosure moratorium that ends in September, and the demand for entry level houses from first-time home buyers and investors is exceedingly high…and when demand far outpaces supply, then overbidding and “auction-type” frenzy is the only way a buyer can successfully purchase a home.  Multiple offers are still the norm, with most bank owned properties generating between 10-20 offers for the seller to choose from.

In the higher end market, the demand is not as great due to the higher interest rates and loan costs coupled with the larger down payment required to purchase a home in this range.  As a result, demand is not as high, and the overbidding is not as necessary.  Fewer buyers equals less buying frenzy.

In the price range below $350,000, the over bid rate has climbed from a low of 50% in April to the current rate of 68%.  This increase corresponds almost directly with the effects of a slow-down in the availability of foreclosures from both the Federal and State governments.  These programs were designed to give banks more time to work out loan modifications and assistance programs with troubled home owners, but instead has resulted in a minuscule amount of modifications and a massive log-jam of foreclosures simply stacked and packed waiting for the moratorium to expire. 

Many buyers, exasperated with the process of trying to purchase a home in these highly competitive conditions, have decided to wait until more inventory is available for sale.  This is fine if the banks release their foreclosures soon, but there is always the possibility that the banks will ration those releases as well, preferring to maintain the current inequity in the supply and demand chain.  After all, what seller would not like to have 10-20 offers from which to choose…and perhaps get the price bid higher?

Only time will tell what is the correct buying strategy, but for now, what we can say is that this real estate market continues to be red-hot below the $350,000 level…and if you are planning on purchasing  a home any time soon, bring buckets of patience as you travel the path towards your housing dream.