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.

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

This trend is not only in Santa Clara County, 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 Santa Clara County 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.

Santa Clara County Home Renovations No Longer About McMansions

Santa Clara County 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 Santa Clara County 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 Santa Clara County 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.

Santa Clara County 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 Santa Clara County home, do yourself a favor: don't make the mistakes Money Talks editor Stacy Johnson outlines in this video…

There are a lot more Santa Clara County 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 Santa Clara County home buying process.

A Santa Clara County home inspection is a very important part of the home buying process. When buying a home, there are many things that may need attention and require repair in order to insure that the house is habitable and safe for its occupants.

Reasons for a Santa Clara County Home Inspection

A home inspection should be performed prior to the purchase of the house for the benefit of the purchaser. If the home is not fit for living due to its safety issues, it is best to consider another house; unless a strong preference for that house still exists. This may require much renovation or even a rebuilding of the house.

A home inspection would give an indication of the extent of renovation required to the home the potential homeowner is considering before an actual purchase deal is concluded.

This would allow the purchaser to consider if the deal would be a good investment or unwise. Not only will you find out what is wrong with the house, you will also find out what is right.

The relatively small home inspection fee (compared to what you're paying for the house) is worth the time and effort as it can potentially save you thousands and thousands of dollars in the future. Purchasing a house is not an easy task. It should be a good investment which can benefit the owner for years to come.

It would be foolish to purchase a house in bad condition that requires heavy maintenance and repairs, besides threatening the safety and health of its occupants.

Process of a Santa Clara County Home Inspection

A home is a heavy investment; not everyone is familiar with the home inspection process. Only qualified, experienced, licensed and insured inspectors should handle this task. There are state licensed home inspectors who can inspect the house on your behalf and inform you as to the condition of the house before your purchase is completed. They are qualified and knowledgeable about the exact requirements of a Santa Clara County home inspection according to the state laws on home inspections.

Depending on the size of the house, and the condition of the house, the home inspection process would take only a few hours. The home inspector will go over the entire house and evaluate the condition of all the components of the house. He or she will point out the good and bad aspects of the house for the home buyer or owner so you'll know the condition and value of the home. Home inspections do not always cover every single item in the home, so be sure to consult with your home inspector to see what items he or she will not inspect.

After the home inspection is completed, your inspector will provide you with a full written report on the condition of the home. You may want to ask your home inspector if he or she minds if you attend the home inspection as it is being performed. This may help you more clearly understand the report when you get it.    

Does renting a Santa Clara County home really make sense? Your option of buying a Santa Clara County home versus renting, with home prices being low, plus some of the lowest mortgage rates in 30 years, makes owning a Santa Clara County home more like a savings account…

If you'd like to find out if buying a Santa Clara County home versus renting one makes more sense for you and your budget, contact us for a free, no obligation consultation.