Falling home prices and an overabundance of distressed properties are starting to ignite bidding wars in Arizona, as first-time buyers are vying against each other to snap up bargains in the lower tier of the housing market. Some data also suggest that there are would-be buyers who are losing out to higher bids multiple times.
From The NYT: With this sweltering desert city [Phoenix] enduring one of the largest tumbles in housing prices for any urban area since the Depression, there is an unrelenting stream of foreclosures to choose from. On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.
There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like… [Lou] Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.
Real estate got just about everyone into trouble in Phoenix, and the thinking seems to be that real estate is going to get everyone out.
The low end of the real estate market here — and in some equally hard-hit places like inland California and coastal Florida — is becoming as wild as anything during the boom.
One real estate agent was showing a foreclosed house to a prospective client when a passer-by saw the open door, came in and snapped up the property. Another agent says she was having the lock changed on a bank-owned home when a man happened by, found out from the locksmith that it was available, and immediately bought it. Bidding wars are routine.
From WSJ: In West Sacramento, a buyer represented by Cherie Hunt of Prudential California Realty recently competed against two other bidders for a three-bedroom home built in 2001. Ms. Hunt’s buyer won by agreeing to pay about $220,000, or nearly $10,000 above the asking price…
“I have 20 buyers looking desperately,” says Ms. Hunt.
The bidding wars — common during the housing boom — are currently the exception rather than the rule. Still, stiff competition is a positive development from a market-dynamics perspective because it indicates the housing market is showing tendencies of recovery. Soon the time might come where we see steeper competition for the foreclosures and short sales creating the right conditions for a bottom consolidation and subsequent property appreciation.