Publication: The Day
From West Hartford to Florida to California, multiple offers and bidding wars have returned to some housing markets indicating that in many areas we have either hit bottom or are close to it.
Veteran real estate agent Mollie Abend said that she and her fellow agents at Prudential Ct Realty, in the upscale town of West Hartford, started seeing bidding wars break out in February and the pace has picked up since.
"People have been waiting for the market to bottom out and how do you know when the market bottoms?" she asked. "You know when prices start rising."
Abend, who specializes in selling homes in West Hartford and in the West End of Hartford, said that she has been involved in about eight multiple offers on homes in the last few weeks.
The homes have ranged from $300,000 to $700,000. The condition of the home was less important than whether it was priced right, she said.
Abend said her manager estimates that the West Hartford office has been involved in about 50 multiple offers this year, a rarity in the last few years.
Record low mortgage rates, which will probably rise soon; pent-up demand from those who were afraid they could not sell their homes and relocated families that had been afraid to take a chance on buying and have been renting provide much of the impetus to the new demand.
The returning upmarket - nowhere close to what it was in the go-go years - has not hit the condo market, historically the last to bounce back.
The big issue, Abend said, is whether appraisers, who were blamed for much of the excesses, are willing to raise their estimates of what a home is worth. Without that, many of the sales will not go through as much higher down payments will be required.
While West Hartford may be a special case in Connecticut because it has excellent school systems, a well-run government, a European-style center that boasts more than 20 restaurants and coffee shops, most with outdoor dining, the bidding wars are being seen elsewhere.
"We very much believe we've hit bottom," Ivy Zelman, chief executive of a research firm, who was among the first to warn of a downturn seven years ago, told the Wall Street Journal. Earlier this week, she raised her home-price forecast for the year, calling for a 1 percent annual gain, up from a 1 percent decline.
The Wall Street Journal recently reported that its quarterly survey found that the inventory of homes listed for sale declined sharply in all 28 markets tracked. The newspaper reported that real estate agents consider a market balanced when there is a six-month supply of homes for sale. At the height of the housing crisis, in 2008, there was an 11.1-months' supply. In March, there was a 6.3-months' supply.
While bidding wars are pushing home prices higher, most of the sellers are taking a loss, especially if they bought their home in 2005 to 2007, at the height of the market. In South Florida, for instance, homes that sold five years ago for $2 million can now be had for less than half that price.
Condos in Florida, Arizona and other retirement centers are especially hard-hit as owners were unable to afford to keep second homes and walked away from their mortgages and condo fees, requiring those left to pay much larger fees to make up for the difference.
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