Be on the lookout for packs of ravenous home buyers this spring! They’ve been spotted roaming everywhere from the hills to the flats of Marin County and the North Bay, attacking properties as soon as they come on the market with multiple offers like great white sharks who’ve caught the sweet scent of blood in the water and quickly whip themselves into a feeding frenzy.
Thought to have been driven near the point of extinction by the Great Recession, the ravenous home buyers have made a comeback in large part due to low interest rates, low prices and low available home inventories. Not so ravenous home buyers are finding themselves caught under the stampede their more aggressive and sometimes desperate brethren. This market is no longer for the timid. Bargain hunters and low-ballers are now the species being driven away, their numbers rapidly dwindling as the reality of a market gone mad sets in.
Who knew this endangered species of home buyers would find traction in 2012? My beginning of the year predictions for a stabilization of the market in 2012 were far too conservative. What we are experiencing now is akin to 2004 to 2006, when everything that came on the market was being sold quickly and often for more than the asking price.
The big difference between then and now is the available inventory. At the inflated, bubbling prices of the past many homeowners were happy to cash in their chips and ride off into the sunset of other states such as Washington, Oregon and Arizona where they bought retirement homes for a fraction of the Marin prices. There are unsubstantiated reports of some of those people returning to Marin and making offers on the homes they previously sold, now for hundreds of thousands less. Actually I’m making that part up, but it could happen!
Caught in the crossfire of the bidding wars breaking out every week are the voices of reason and sanity: the appraisers. What happens when a home is priced at what seems like a market value, then gets bid up well over what was asked? The appraisers are supposed to inform a buyer’s bank what the value of the property is in the current market, and if the buyers are offering more than the appraiser’s value there can be issues with loans and some tough negotiations ahead of the buyers and sellers.
Have we returned to time of Alan Greenspan’s (aka Greenie’s) Irrational Exuberance? What would Greenie say if he knew things had taken this turn towards insanity? Fanning the flames Warren Buffet was quoted as saying that this is the opportunity of a lifetime to buy a house, or something to that effect. So how long are these bottom basement everything must go prices going to last?
There are still some very painful and real kinks to work out in the housing market. People are still selling homes short, and banks are still foreclosing. The interest rates are unsustainable and unnaturally low, and that’s really what needs adjusting next, but that’s 18 to 24 months away. For now the pendulum has finally swung back in favor of the sellers. Enjoy the ride off the bottom while it lasts.