Apr
30

After a Long Hiatus, Bidding Wars Make a Comeback

April 30, 2012

Something strange is happening across the national real estate market: Bidding wars.

Bidding WarsWith all the sustained news of foreclosures, shorts sales, high rent and low home prices dominating the Chicago housing market, one would think the bad news would stick around like the city’s notoriously nasty winters.

However, on a long enough timeline, things have to change.  Bidding wars have come back into the lexicon of the real estate market, albeit in a slightly different version that the pre-housing crisis years were accustomed to.

There are a few reasons for the prevalence of bidding wars.

  • A shortage of inventory has created a landscape in which buyers are eager to outbid others.
  • Sellers are still not interested in selling their property at a loss and are willing to take their homes off the market and wait for better times.
  • Investors have snatched up properties with cold hard cash.
  • Inventory levels may be low due to Freddie Mac and Fanny Mae, among other national banks, holding their foreclosures off the market.

New home sales have experienced a boom due the declining inventory of old homes on the market. This year, new home sales have been up 16 percent compared to a year ago. The inventory of new homes fell in the month of March to their lowest levels since 1963 when inventory record keeping began.

This new era of bidding wars is not necessarily driving home prices through the roof. As the country regains its footing, affordability is the name of the game in today’s real estate market. Interested buyers are willing to engage in a bidding war since homes are selling for such low prices. As anyone who has been paying attention is well aware, this is a buyer’s market. Seller’s, although happy that offers are pouring in, are often selling for much less than what they originally paid for their property.

With mortgage rates sitting at 3.88 percent for a 30-year fixed mortgage, potential homeowners are in a much better position to purchase a home they could not have afforded a few years ago.

Chicago has not been able to take part in the lack of inventory creating bidding wars throughout the country. Currently, the Windy City has a 9.4 month supply of homes. However, the number of homes available is dwindling. According to Department of Numbers, as of April 23, 2012, the number of home listings has decreased by 13.6 percent from the same time lat year.

About The Author

Read All Stories By Mitch Levinson

Mitch Levinson is the author of “Internet Marketing: The Key to Increased New Home Sales” published by BuilderBooks. He is an Internet marketing expert with expertise in search engine optimization, website development, email marketing, social media and CRM consulting services. He is known for creating effective programs that can be tracked through analytics to prove effectiveness and ROI. Mitch is founder and president of MLC New Home Marketing and MLC FlatFee Realty, as well as managing partner of mRELEVANCE, LLC, a Marketing, Communication, Interactive agency with offices in Chicago and Atlanta. He currently leads the Chicago team. A Multi-Million Dollar Sales Producer who earned an MBA in Computer Information Systems and eCommerce, he brings a unique perspective and experience to the field of real estate communications. Mitch combines the two interests in order to help home builders and developers gain a competitive advantage through the Internet and technology. When he isn’t behind a computer, he enjoys participating in sports and coaching his kids’ teams. Mitch resides in Arlington Heights, Ill., a northwest suburb of Chicago, with his family, which includes two rambunctious labs. Visit my Google+ profile.

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