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Last year, some analysts were speculating the large supply of REOs and shadow inventory would keep the market depressed, but instead, the market is dealing with a lack of inventory available for sale, ProTeck Valuation Services noted in its May Home Value Forecast (HVF).
“[I]n reality the shortage of housing inventory has led buyers to bid more competitively against one another leading to significant home price increases and tighter housing conditions,” said Tom O’Grady, CEO of Pro Teck. “Aside from anecdotal stories, Home Value Forecast shows that one of the most reliable leading indicators to support this theory is the Sold-To- List Price ratio.”
According to the report authors, the sold-to-list price ratio tends to land somewhere in the range of 92 and 98 percent, but in high demand markets, the ratio can exceed 100 percent.
For example, in the San Francisco Bay area, nearly all ZIPcodes showed sold-to-list-price-ratios close to or above 100 percent, confirming stories of bidding wars, according to Pro Teck’s analysis,
On the other hand, the Chicago area’s sold-to-list-price-ratio pointed to more normal conditions, with much fewerZIP codes with ratios close to or above 100 percent.
“The Sold-to-Listed Price Ratio has historically led home prices by approximately six months over the past three real estate cycles and its turning points have been excellent signals for the same in condo prices,” added O’Grady.
As always, the HVF provided a list of the month’s 10 best and worst performing markets out of 200 Core Based Statistical Areas (CBSAs) based on factors such as sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio, and foreclosure and REO activity.
Michael Sklarz, principal of Collateral Analytics and report co-author, noted two of the top markets are in Nevada, while California continues to be well represented on the list.
The authors also pointed out that several of the top markets from late last year fell off the list since their year-over-year sales counts are down due to a lack of inventory.
“The bottom ranked metros also represent an interesting mix around the U.S. While all have nine to thirteen Months of Remaining Inventory, many of the indicators are showing positive trends even for the bottom metros area this month,” added Sklarz.
- Oakland-Fremont-Hayward, California
- Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
- Las Vegas-Paradise
- Warren-Troy-Farmington Hills, Michigan
- Salt Lake City
- Los Angeles-Long Beach-Glendale
- El Paso, Texas
- Shreveport-Bossier City, Iowa
- Akron, Ohio
- Spokane, Washington
- Chattanooga, Tennesee-Georgia
- Dayton, Ohio
- Peoria, Illionis
- Little Rock-North Little Rock-Conway, Arkansas
- Clarksville, Tennessee-Kentucky