Latest MLS Closing Stats Show Rise in Overbidding

Westcoe Realtors, Riverside California…According to the MLS closing statistics for September, 2009, properties that closed at or above the list price for the Riverside/Moreno Valley has reached a new all time high of 73%.  This is up from 67% in August, and represents the largest jump in the past 6 months.

This increase is the direct result of the vast upward spiral of multiple offers that are now received on most properties currently for sale.  Due to the extreme decrease in the number of properties now on the market (read previous posts on this blog), and the increased demand by first time home buyers anxious to purchase a home at today’s lower prices and interest rates, the number of multiple offers on the majority of properties available for sale has skyrocketed in the past few months. 

More buyers and fewer sellers means everybody is left to fight over the few available properties for sale.  This type of huge inequity between supply and demand means a bidding war for anyone desiring to purchase a home…and this bidding war results in eventual closings for the successful bidder in excess of the original list price.

In the price range of $350,000 and below, the ”overbids’ are actually higher, at 75%…which would make sense given that the majority of buyers are shopping in this price range.  In the higher price range of over $350,000, the statistics fall sharply to 58%, but even at that level, this current 58% is significantly higher than last month’s level of 50%.

Many buyers are concerned and frustrated by this frenzied overbidding process, and hoped that when banks release the thousands of repossessions they still have in some state of foreclosure, then supply will rise and the overbidding will not be as necessary.  However, if the banks continue to “piece-meal” their foreclosures and only release a limited number at a time, then there is no assurances that our current market will change any time in the near future…and the real estate buying public will see these overbidding statistics continue to hover at their current percentages.

Given the opinion of this writer that the banks are more concerned with their quarterly Wall Street profit pictures than they are in selling their massive supply of foreclosed properties (see previous blog post), then the manic, intense-pace purchasing real estate market we are now experiencing will be the norm for quite some time.  We would love to be wrong about this, but we fear we are not.  Only time will tell, but in the meantime, if you are considering purchasing a home in this pricing environment, strap on your helmet, get a good agent who can guide you through this maze, and take a heaping dose of anti-frustration medicine…because if you can get a home at today’s prices, it will be worth it.

Take care, and as always, let us know if there is any issue you would like to see addressed in this blog.