Thursday, October 15, 2009

Where'd That Buyer's Market Go?

Didn't it just seem like there was a massive swing from a seller's market to a buyer's market? Leading up through about 2005 or 2006, it seemed buyers were constantly facing multiple-offer situations, and frequently watching homes sell above the asking price. Not all markets, but it was common in the Bay Area. Sometimes the seller priced deliberately low to try and incite a bidding frenzy.

Then, the bubble burst. Foreclosures and short sales hit the scene. And we had 20 listings for every buyer. Low-ball bids, high inventory were commonplace. It was a complete inversion of the seller's market, as the buyer now had all the levers.

And in recent months, we've heard some pretty wild stories about some segments of the market. What is interesting to me is the lower end homes, first-time buyer price range. This market is back to full on mania! Much of the inventory is controlled by banks, the prices are low/affordable. And investors with cash have come out of the woodwork to pick up these places. First time home buyers are racing to buy before the $8000 tax credit expires.

We are hearing of cases with 20 offers. 30 offers. 40 offers... listings stating that "all non-cash offers will be dismissed". Buyers are taking a shotgun approach, putting offers out on several homes, hoping one 'sticks'. Crazy stories about Realtors stealing keys so other agents cannot show listed homes, and the other agents breaking in to the home to show to their clients... !!! Madness.

It's amazing to me that we would see the market go from one extreme to the other so quickly. No time spent in the middle, no 'equilibrium'. But we'll straighten this out eventually. And it will last for a while before the next tilt happens.