Bidding wars

As most know, the National Association of Realtors reported a 19.2% decrease in inventory of homes for sale year-over-year in February.

That means, with low levels of home for sale inventory, buyers are seeing bidding wars.

Realtors in many areas are seeing not just one or two offers, but multiple offers. It is not just a question of whether a new listing will get offers, but how many offers it will get.

The most offers received are listings in California. Reportedly, 90% of homes sold in Sacramento, San Francisco and Southern California have had the most multiple bids during the month.

At least two-thirds of sales in Boston, New York, Washington D.C., and Seattle had bidding wars.

In part, the problem is the lack of new construction. In Connecticut only 7.1% of homes have been constructed after 2000.

In Fairfield County, 6.8% of homes were built after 2000, according to the Census Bureau. Many home buyers in our area want the latest conveniences and new or renovated homes. That is just one of the reasons there is such demand for low inventory.

There’s a shortage of land for sale, increasing costs of building materials, changing regulations, and restrictions on building homes and construction financing. They are all contributing to the shortage of new homes. What may entice builders to develop are buyers purchasing homes in the process of being built.

In south Fairfield County, new construction houses typically sell for $1.5 million to $2 million.

Many home owners and buyers are deciding to tear down older homes and build one that is more energy-efficient and with a floor plan that suits their needs.

Home buyers today, unlike buyers during the peak of the real estate market, are cautious, are well-educated on their market of interest and have less to spend.

They have saved up their money, if first-time buyers, and realize the responsibilities associated with taking on credit. Buyers want to take advantage of low interest rates and affordable homes. First-time buyers represent about 20%-30% of home purchasers, according to rough and informal estimates by Realtors.

Realtors in Greenwich are also working with more clients who are transferring to our area because of their employment.

This is an indicator that buyers are more confident about their jobs and that employment is improving and starting to benefit the housing market.

Investors in real estate are adopting strategies of investors in the stock market. They are buying and holding homes. In the past, they looked for commercial and multifamily properties and now they are purchasing single-family homes.

The downside to this is that although there are low levels of home inventory, prices have not significantly increased. Even in multiple-bid situations, buyers are submitting bids that are not that much more than list price.

If a property is listed in the lower end of its price range, the buyers will bid what they believe the property is worth and no more.

Bidders whose offers are not accepted move on. This shows buyers are not as emotional as they were in the peak of the market.

Among those listing properties are people wishing to downsize. They have had their properties before the real estate boom and were looking for the market to improve to list. They have a lot of equity in their home.

With inventory at low levels, their homes will move fast if appropriately priced so they can move on to their new lifestyle.

 

Mary Ann Clark is a Realtor with Coldwell Banker at 177 West Putnam Avenue in Greenwich. Questions or comments may be emailed to [email protected] or she may be reached directly at 203-249-2244.

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