“Strike while the iron is hot,” is the idiom that investors and eager homeowners seem to be chanting this spring, as the market is slowly starting to see a rise in bidding wars. Many of the nation's major housing markets for-sale listings have increased, and a large number of house hunters are competing for choice properties. Though the competition is most intense in California there has also been reported spikes in bidding wars in Massachusetts, Washington D.C., Seattle, and New York. Some properties are receiving thousands over the asking price. Tucson property management companies prevalent in maintaining rental properties are no doubt wondering if the bidding wars will spread to Arizona before year's end. So what do the bidding wars mean for the real estate market?
Lower Housing Inventory
Inventories of homes for sale continue to shrink, note many Tucson property managers. In February, the National Association of Realtors reported a 19.2% decline in inventory year-over-year. So though the number of homes for sale should rise, housing inventory is expected to remain low which pushes prices higher.
Average buyers vs. Investors
Eager homebuyers are determined to purchase real estate before home prices and mortgage rates rise, but are facing some stiff competition from headstrong investors. In fact, fiercely competitive investors are quickly snatching up properties all over the country while some average homebuyers are facing frustration just finding a place of their own. Many homes that would be purchased in a normal market by average buyers are even ending up in the hands of cash-paying absentee owners, typically investors, according to the real estate information company DataQuick.
Cash is King
Tucson property managers definitely agree that it is a seller's market. Good credit is essential to stay afloat in a raging bidding war, but cash is still king. Whoever is bringing more to the table is most likely to trump the competition. So even regular homebuyers with healthy down payments still must try and beat out investors coming in with more cash and often come up short.
As much as real estate enthusiasts would love to see an increase in the market this spring, hopefuls still remain cautious. Just because a few markets are doing exceptionally well doesn't speak for the rest of the country. And despite the bidding wars in the more popular housing areas like California, many are still just trying to keep their head above water by trying to avoid the hit of short sales or opting to rent from Tucson property managers until a better time to strike arrives for them.