A year ago, many housing market analysts were predicting that the huge supply of REO and historic volume of shadow inventory properties would keep the real estate market depressed for a long period of time. But this is not the current case.
Across the nation, a shortage of available housing inventory is forcing prospective buyers to bid against one another for those properties that are listed for sale. Therefore, significant home price increases are taking place in many markets.
According to Pro Teck Valuation Services’ May Home Value Forecast, there have been numerous anecdotal stories of multiple offers being received on homes shortly after being listed, with potential buyers offering significant premiums to the listing prices. The Waltham, Mass.-based real estate valuation provider’s said the sold-to-list ratio typically fluctuates between 92% and 98%, but in very hot markets can exceed 100%.
Since the sold-to-list indicator moves directly with the market itself,
For example, San Francisco is one city the HVF analyzed this indicator as “bidding wars” between potential buyers and homes being sold above listing price as soon as they come on the market have been prevalent. The report concluded that many of the ZIP codes around the Bay Area have been near a 100% sold-to-list ratio since the third quarter of last year, proving the theory that bidding wars are taking place in the area.
Conversely, Chicago is currently exhibiting more typical sold-to-list price ratios in the high 80 and low 90 percentiles.
“The sold-to-listed price ratio has historically lead 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,” said Tom O’Grady, CEO of Pro Teck Valuation Services.
