Home Buyers Find Bidding Wars Again

Home buyers nationwide are being caught by surprise as the spring selling season swings into high gear. Bidding wars are back!

Many buyers are finding themselves competing for the same house. Unlike the bidding wars of the past, these recent bidding wars are the result of a shortage of inventory.

Sellers, meanwhile, are not seeing huge price increases or hefty profits, like some did during the boom years when prices were going through the roof. Competitive bidding in this current enviornment is being caused by tight inventories. More evidence that housing demand is starting to pick up again after a six-year slump.

According to a Wall Street Journal quarterly survey, the inventory of homes listed for sale declined sharply in all 28 markets they track. At the height of the housing crisis in 2008, there was an 11.1 months' supply of home for sale. In March, there was a 6.3 months' supply. Real estate agents normally consider a market to be balanced when there is a six month supply of homes for sale.

An index recently reported by the National Association of Realtors measuring the number of contracts signed to purchase previously owned homes rose in March to its highest level in nearly two years, up 12.8% from a year ago, and 4.1% from February.

Market inventory varies in different parts of the country, but the general consensus nationwide is, the number of houses for sale is edging down.

Inventories seem to be declinging for several reasons. Some sellers have taken their homes off the market to wait for prices to increase and market conditions to improve. Investors, meanwhile, have been outmaneuvering consumers for the best properties, often making cash offers that are quickly accepted by anxious sellers.

Improvements are obviously investments in your home, and most homeowners have a list of things they'd like to do to their home to make it their dream home. Things like: gutting the kitchen, reconfiguring the bathroom or repainting the entire outside of the home.

Some economists say inventory levels are artificially low because Fannie Mae, Freddie Mac, and the nation's largest banks have been slow to list hundreds of thousands of foreclosed homes they own. Lenders slowed down the foreclosures after record-keeping abuses came to light 18 months ago.

If those same banks and lenders step up their efforts to unload their properties, inventories could quickly rise, putting pressure on prices again.

Even with bidding wars popping up again, pushing prices higher in some areas, many homes are still selling for prices much lower than they were a few years ago. Meanwhile, rents are rising at a time when mortgage levels have fallen to or near record lows. Many renters are finding rates so low they can now afford a house that was out of their price range just a year or two ago.

Housing markets face another danger. More than 11 million homeowners owe more than their home is worth, causing the trade-up market to completely stall. When homeowners can't sell their home, let along come up with the down payment for their next home, move up buying tends to dry up.

Mortgage lending standards remain very tough. Many "deals" fall apart because homes won't appraise for the price buyers have agreed to pay, and sellers are not willing to come down even more than they already have.

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Mortgage Rates Remain Near Record Lows

Mortgage rates have dipped to near record lows again, keeping home buying and refinancing very affordable.

Last week, mortgage buyer Freddit Mac reported the rate on the 30-year fixed rate loan had dropped to 3.88%, down from 3.9% a week ago. The rate hit 3.87% back in February, the lowest long term mortgage rate in history.

The average on the 15-year fixed rate mortgage dipped to 3.12%, down from 3.13% the previous week. The national average hit an all-time low of 3.11% just two weeks ago. Average rates do not include extra fees, aka points, which most borrowers have to pay in order to get the lowest rates. One point equals 1 percent of the loan amount.

So far, record low mortgage rates have done very little to boost home sales. Analysts suspect that a record warm winter may have something to do with that, as many sales that would have normally taken place during the spring buying season, actually took place in January and February.

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Spring Cleaning For Your Finances

With Spring in full force most everywhere now, and tax season once again behind us, now is a good time to do some "spring cleaning for your finances" to help you eliminate some of the paper clutter, and get better organized.

Here are some tips on Spring Cleaning for Your Finances and your office record keeping…

We welcome your comments and suggestions below.

Tri-County NJ home renovations, in general, now exceed the dollar value of expenditures on newly constructed single family homes.

This trend is not only in Tri-County NJ, according to federal estimates, but it is having a profound effect on real estate markets all across the country.

Housing Scenarios

Maybe you can say you fit one of these scenarios.

• You've been reluctant to sell because you don't think you can get what your house is worth…

• Buying a home seems out of reach because it's so difficult to qualify for a mortgage…

• You've decided it may be smarter to improve the house you already own and just stay put for a while…

The National Association of Home Builders' remodeling market index recently hit its highest level in five years, which only underscores this home remodeling trend.

Many Tri-County NJ home renovations companies are seeing a significant jump in interest in renovating, especially from owners who have been in their houses for years, have built up some savings and managed to get through the recession without falling behind on their mortgages.

Tri-County NJ Home Renovations No Longer About McMansions

Tri-County NJ home renovations are generally the projects where people are no longer thinking along the grand, McMansion show-off scale; they're smaller, more modest, less costly efforts than five to seven years ago, with more emphasis on finishing details and quality than square footage.

Many of the Tri-County NJ home renovations being made are not ones where the owner worries about immediate paybacks from their improvements. Most owners understand that the boom-time expectations of 100 percent immediate returns on their investment are gone.

Most people are happy with modest returns, which is right in line with what's happening overall in the Tri-County NJ real estate market: a slow, modest recovery, spurred by modest and realistic expectations about where we're headed and how fast we'll get there.

Tri-County NJ home buying is no different than home buying in any other part of the country. Home buyers all tend to make some pretty dumb mistakes from time to time.

If you're buying a Tri-County NJ home, do yourself a favor: don't make the mistakes Money Talks editor Stacy Johnson outlines in this video…

There are a lot more Tri-County NJ home buying mistakes to avoid, and we can help you avoid them. Contact us for more information and a free, no-obligation consultation about the Tri-County NJ home buying process.

Tri-County NJ home prices rose for the first time in 10 months, according to the S&P/Case Shiller composite index released recently, an encouraging sign the battered housing sector is starting to stabilize.

It was the first time home prices have gained since April 2011. That gain was itself an anomaly in a string of declines stretching back to May 2010.

Tri-County NJ Home Prices Likely to Remain Weak

Yale economics professor Robert Shiller, the co-creator of the Standard & Poor's/Case-Shiller home price index, believes the Tri-County NJ housing market is likely to remain weak and may take a generation or more to rebound.

Shiller, the co-creator of the Standard & Poor's/Case-Shiller home price index, told Reuters Insider a weak labor market, high gas prices and a general sense of unease among consumers was outweighing low mortgage rates and would likely keep a lid on home prices for the foreseeable future.

David Blitzer, chairman of the index committee at Standard & Poor's, cautioned that while there were some pieces of good news in the report, some areas saw home prices still continuing their decline.

The S&P/Case Shiller composite index of 20 metropolitan areas gained 0.2 percent in February on a seasonally adjusted basis, matching economists' forecasts. Seven of the cities saw home prices drop on a seasonally adjusted basis, while home prices in two cities were unchanged. On an unadjusted basis, 16 of the areas slumped further.

Home prices in the 20 cities fell 3.5 percent year over year, moderating from the previous month's decline of 3.8 percent.

"Looking forward, we think homes sales will continue to trend upward, which ultimately will result in a slower rate of home value depreciation," said Stan Humphries, chief economist at Zillow. "But any housing recovery will be dependent on job growth. Continued progress in this area is essential to keeping the housing recovery, such as it is, on track."

Higher Tri-County NJ home prices are expected by 33 percent of consumers over the next year. Fannie Mae's March housing survey indicated 5 percent more people expect Tri-County NJ home prices to increase this month over the 27 percent surveyed last month who thought prices would increase this year.

Nearly half of consumers expect higher rental prices as well, the highest number registered by Fannie Mae since its monthly tracking began in June 2010. Americans' rental price expectations for the next year continue to rise, reaching their record high level for the Fannie Mae survey this month.

The percentage of respondents who say it is a good time to buy rose by three points to 73 percent, the highest level in more than a year, while the percentage of respondents who say it is a good time to sell rose one point to 14 percent this month.

Consumers' confidence about their own finances is stabilizing, with 44 percent expecting an improvement over the next year.

Higher Mortgage Rates Expected

There is an increasing share of consumers expecting both higher mortgage rates and Tri-County NJ home prices over the next 12 months.

Doug Duncan, vice president and chief economist of Fannie Mae says, "Americans' rental price expectations for the next year continue to rise, reaching their record high level for our survey this month."

Duncan says, "Some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice. Conditions are coming together to encourage people to want to buy homes."

While the "sales of existing homes in January and February marked the strongest start to a year since 2007," according to the combined Housing and Urban Development (HUD)/Treasury statement. "Data on home prices changed little from the previous month – marking a fifth month of seasonal lows."

For further Fannie Mae survey findings, visit the Fannie Mae Monthly National Housing site.