Are bidding wars here to stay?

WASHINGTON – March 12, 2015 – The housing bubble was known for bidding wars as buyers with a limited number of for-sale homes sent prices soaring over list prices.

Even though the housing meltdown is in the rearview mirror, however, bidding wars have not returned to pre-recession levels. They haven’t disappeared in some markets – and they aren’t likely to go away anytime soon, new research suggests.

Before the housing bubble, about 3 to 4 percent of U.S. homes sold through a bidding war, according to new research published in the journal Real Estate Economics. In the study, researchers evaluated National Association of Realtors® data dating back to the 1980s.

During the peak of the housing bubble, they found, nearly 30 percent of homes in metro Washington, D.C. sold via bidding wars – the highest share of any other metro analyzed. In Los Angeles, 26 percent of homes sold via bidding wars during this time; 23 percent in Las Vegas; and 22 percent in Baltimore and Norfolk, according to the study.

Since the housing crisis, the percentages have dropped considerably, but they remain elevated, according to the analysis.

“The persistence of this suggests that people have decided that this is a good way to think about selling these kinds of goods, selling houses in a more auction-like way,” says William Strange, an economist at the University of Toronto’s Rotman School of Management, and a co-author of the study.

Today’s bidding wars don’t take place in only areas with limited inventories of for-sale homes, researchers note. They suggest that real estate professionals may be strategically listing homes below their value to spur bidding wars.

“With the rise of bidding wars, we shouldn’t think that the housing market – like other markets – is just going to keep doing things in the old traditional ways forever and ever,” Strange told The Washington Post. “There are going to be changes.”

Source: “A Legacy of the Housing Bubble That Won’t Go Away: Bidding Wars,” The Washington Post (March 10, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688

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Consumers say getting a mortgage is easy

McLEAN, Va. – March 12, 2015 – Fifty-four percent of Americans say that they believe getting a mortgage is easy – a record high number for Fannie Mae’s National Housing Survey, which is a monthly poll of about 1,000 Americans’ attitudes toward the housing market.

The February 2015 survey cites a strengthening employment sector and consumers’ growing economic confidence as key to their improved attitudes about the housing market.

“Continuing improvements in consumer attitudes in this month’s National Housing Survey lend support to our expectation that 2015 will be a year of the economy dragging housing upward,” says Doug Duncan, chief economist at Fannie Mae. “The share of consumers who think the economy is on the right track rose to a record high since the inception of the survey nearly five years ago, and for the first time exceeded the share who believe it’s on the wrong track.”

Duncan says consumer confidence is getting a big boost from employment growth, which also leads to increasing optimism over the ease of getting a mortgage.

“We continue to see strength in attitudes about the current home buying and selling environment and consistently high shares of consumers saying they expect to buy a home on their next move,” Duncan notes. “At the same time, we still need to see further growth in consumer optimism toward personal finances and income for more robust improvement in housing market attitudes.”

Additional findings from February’s survey

The average 12-month home price change expectation remained at 2.5 percent.
The share of respondents that says home prices will go up in the next 12 months declined to 46 percent, while the share that says home prices will go down dropped to 6 percent.
The share of respondents surveyed that say mortgage rates will rise in the next 12 months returned to 48 percent.
The number of those surveyed that say it’s a good time to buy a home remained at 67 percent in February; the number that say it’s a good time to sell fell by 4 percentage points to 40 percent.
The percentage of respondents that expect their personal financial situation to improve over the next 12 months dropped to 46 percent.
The percentage that says their household income is significantly higher than it was 12 months ago dropped 5 percentage points to 24 percent.
Source: “Consumer Optimism Toward the Economy Reaches New All-Time Survey High,” Fannie Mae (March 9, 2015)

© Copyright 2015 INFORMATION, INC. Bethesda, MD (301) 215-4688