Residential Real Estate Bidding Wars Are Back

Home buyers are stunned to see the bidding wars for properties coming back.  I posted in my blog "You Heard it Here First" back in November that the numbers were stacking up for a boost in sales prices.  There were many buyers waiting on the sidelines to see a bottom and they have jumped in to the buyer 'pool' at the same, even as inventory levels continue to decline.  Sellers, seeing this, are holding back if they do not need to sell and that leaves very little existing inventory with prospective homeowners competing with investors. 

This is not just a local phenomenon here in the Phoenix/Scottsdale market but appears to have a widespread nation wide reach.  One index that measures the number of contracts signed to purchase previously owned homes rose in March  to its highest level in two years gaining to 12.8% from 4.1% according to the Wall Street Journal. 

My personal opinion is that this will not stop until rent rates to sales price ratios decline and investors start falling away.  However, that means that housing prices will be higher when that happens.  Most indices including the Case Shiller Index for the Phoenix are market indicate we are back at 2000 to 2001 pricing so we do have a little ways to go to reach long term trend lines.  The only thing to put restraint on the rapid appreciation is the employment picture, but even that is improving in our market.