“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

1. Fierce competition.

Housing affordability is at record highs, due to falling home values and mortgage rates hovering near record lows. More buyers are taking notice and jumping off the sidelines. And mixed with sinking inventories of homes listed for sale, the competition is getting more fierce.

Investors are snapping up bargain prices, often in all-cash deals, which means greater competition for traditional home buyers too.

“Rents are going up, and as long as there are properties at the level where investors can get the positive cash flow, they will continue to invest,” says Jed Smith, managing director of quantitative research for the National Association of REALTORS®. Smith adds that first-time home buyers, in particular, may find increased competition from investors in trying to snag some of the best deals on the market.

2. More renters show desire to become home owners.

Recent surveys have shown that buying a home nowadays is more affordable than renting. As such, more renters are finding home ownership more enticing.

The signs are already starting to show: About 59.5 percent of tenants recently surveyed say they intend to renew their leases this year, which is the lowest rate since early 2009, according to a study by Kingsley Associates.

3. Mortgages may be a little pricier.

Fannie Mae, Freddie Mac, and the Federal Housing Administration recently have raised their loan fees, which means home buyers can expect to pay a little more for their mortgage this spring.

“Those who don’t have credit scores in the high 600s to low 700s may be forced to go the FHA route,” says Ed Conarchy, a mortgage planner at Cherry Creek Mortgage in Gurnee, Ill. “And they will be stuck with the higher fees.”

Buyers with smaller down payments can expect to pay more for FHA mortgage insurance premiums, which have risen to 1.75 percent of the loan total. Bankrate.com cites an example illustrating the higher fees: A borrower who takes out a $200,000 FHA loan will likely have to pay about $3,500 for mortgage insurance upfront. Prior to the increase taking effect, borrowers would pay about $2,000 for that same loan amount.

Borrowers with higher mortgages can expect higher fees too. The FHA announced that in June it’ll increase its annual insurance for mortgages more than $625,500. “A borrower who lives in a high-cost area and takes out the maximum $729,750 (which is the FHA limit for high-cost areas) will pay $912 each month in mortgage insurance alone,” Bankrate.com reports.

Read about more trends expected for the spring selling-season.

Source: “5 Mortgage and Housing Trends in Spring 2012,” Bankrate.com (April 21, 2012)

A recent article at Money Magazine highlighted some of the following tips when shopping for a mortgage:

1. High credit scores count. The lowest mortgage rates go to home shoppers with credit scores of 760 or higher. Avoid opening new lines of credit or loans for at least three months prior to getting a loan. Also, on your open accounts, try to pay off those balances. “One large balance — even if it’s paid off at the end of the month — can ding your score by 20 points or more,” according to the article at Money Magazine.

2. Gather plenty of quotes. Most experts say shopping around can pay off. Gather at least six quotes from lenders on mortgage rates because they can vary quite a bit from lender to lender. Request quotes from local and regional lenders as well as national ones for comparison. Be sure to ask about estimated closing costs, too, which can be anywhere from 2 percent or more of the loan balance.

3. Ask about lock-ins. To make sure the rate doesn’t go up when you’re under contract, ask about a lock-in period on the loan, in which lenders agree to not raise the interest rate within a certain time period. Home shoppers should ask their lender and REALTOR® how long it takes to close loans similar to theirs and see how long they can lock a rate in for. Some lenders will charge several hundred dollars to extend a lock-in agreement, so experts recommend learning the lock-in terms beforehand when shopping for the best mortgage deal.

Source: “6 Ways to Get a Great Mortgage Deal,” Money Magazine (April 30, 2012)

“It’s a little surprising because we thought bidding wars were done with,” Andy Aley, a home shopper in Seattle, told The Wall Street Journal. Aley says he was outbid on a home earlier this year, even though he offered to pay $23,000 above the listing price and also waive inspections and other closing conditions.

Home buyers are frustrated and caught off-guard about the bidding wars re-emerging, real estate professionals report.

“We’re writing a record number of offers, but we’re not seeing a record number of closings and that’s because it’s so competitive,” Glenn Kelman, chief executive of Redfin Corp., told The Wall Street Journal.

Why are things getting so competitive? Many housing markets are seeing a drastic decrease in the number of homes listed for-sale, leaving home buyers with fewer options and more bidding on the same house. Housing analysts say the shortage in supply is from sellers unwilling to take much less for their home than what they originally paid for it and pulling their homes off the market. Also, a surge in investors has made the market more competitive, as investors snatch up homes in bulk in all-cash deals.

“The bidding wars caused by tight inventory provide the latest evidence that housing demand is starting to pick up after a six-year-long slump,” The Wall Street Journal reports.

Indeed, the National Association of REALOTRS® reported late last week that pending home sales in March reached their highest level in nearly two years and are up 12.8 percent from a year ago.

Source: “Stunned Home Buyers Find the Bidding Wars Are Back,” The Wall Street Journal (April 27, 2012)

In fact, all 146 markets posted a drop in their inventory, except for two — Hartford, Conn., and Philadelphia.

The nationwide median list price in March also saw improvement, increasing more than 5 percent last month compared to last year at this time.

The housing picture is much different than last year at this time, when inventory was up 26 percent and list prices were down 4.81 percent.

“If the market continues to hold its own, 2012 could well mark the beginning of a broad-based housing recovery,” according to Realtor.com.

The metros that posted the biggest drops in listings of for-sale homes in the last year are:

1. Oakland, Calif.: -51.91 percent year-over-year drop in total listings

2. Bakersfield, Calif.: -50.35 percent

3. Phoenix-Mesa, Ariz.: -48 percent

4. Fresno, Calif.: -45.56 percent

5. Miami: -42.34 percent

6. Fort Lauderdale, Fla.: -39.66 percent

7. Seattle-Bellevue-Everett, Wash.: -39.38 percent

8. Atlanta: -39.26 percent

9. Orlando: -39 percent

10. Portland-Vancouver, Ore.-Wash.: -38.79 percent

11. Tampa-St. Petersburg-Clearwater, Fla.: -37.35 percent

12. Stockton-Lodi, Calif.: -36.18 percent

By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Daily Real Estate News | Tuesday, April 17, 2012

Housing surveys in recent weeks have shown that more Americans are seeing now a great time to purchase a home. In the most recent survey, 73 percent of Americans say now is a good time to buy, according to the latest Fannie Mae Housing Survey conducted in March. That’s up from 70 percent in February who said it was a great time to buy.

“Conditions are coming together to encourage people to want to buy homes,” says Doug Duncan, Fannie Mae’s chief economist. “With an increasing share of consumers expecting higher mortgage rates and home prices over the next 12 months, some may feel that renting is becoming more costly and that home ownership is a more compelling housing choice.”

Indeed, more buyer urgency is evident in the market. Thirty-three percent of those surveyed by Fannie say they expect home prices soon to increase, which is the highest percentage in a year. What’s more, nearly 40 percent say they expect mortgage rates to rise in the next year too, which is also up from previous surveys.

Coupled with that, 48 percent of Americans say they expect rents to continue to climb, and 44 percent say they expect their financial situation to improve in the next year.

Source: “More Americans Think It’s Time to Buy a Home,” MSN Real Estate (April 9, 2012)

Residential exurbs on the edge of metro areas once were a popular place for city dwellers to flock for bigger and more affordable housing options, but the trend is reversing.

“The heyday of exurbs may well be behind us,” Robert J. Shiller, a Yale University economist, told the Associated Press.

Rising gas prices are certainly one factor behind the shift, economists note, but demographic changes are also playing a part. More young singles are delaying marriage and having children, and thus find they don’t need the extra roominess the exurbs tend to offer in housing. Older populations are also showing greater preferences for living in walkable urban centers.

Many outer suburbs that had been experiencing booming growth just a few years ago are now seeing growth stall. In fact, 99 of the 100 fastest-growing exurbs and outer suburbs of 2006 experienced small or no growth at all in 2011, according to Census data. (Spotsylvania County, Va., south of the Washington, D.C., metro area, was the only exception.)

“The sting of this experience may very well put the damper on the long-held view among young families and new immigrants that building a home in the outer suburbs is a quick way to achieve the American dream,” William H. Frey, a Brookings Institution demographer, told the Associated Press.

Source: “An End to America’s Exurbia? For First Time, City, Urban Growth Outpaces that of Outer Suburbs,” Associated Press (April 6, 2012)

Prices are so low on some properties that even a 14-year-old girl — with the help of her mother — was recently able to purchase a home as a rental property in Florida, all-cash, for $12,000, NPR reports.

Ben Yonge, president of an investment brokerage, Equity First Realty, calls the home prices he’s finding in Orlando “absolutely ridiculous.”

“There are $19,000 condos in the heart of Orlando,” Yonge told MSNBC.com. Yonge recently purchased a four-unit apartment building in Orlando, which once fetched $120,000, for $25,000.

A rise in $10,000 or below properties has risen the most in the past year in Fresno, Calif.; Wichita, Kan.; Greensboro, N.C.; and Los Angeles.

But these ultra deals are starting to fade away in more cities. The number of listings in the $15,000 and under price range in February saw a decline in the last year in several markets, including Atlanta, Chicago, and even Detroit (where the median price for an existing single-family home sold last year was $54,000), according to Realtor.com data.

Source: “Bust Leaves Market Littered with Homes Under $10,000,” MSNBC.com (April 2, 2012)

Landlords usually are individuals or small investment firms that own a few homes. “Nobody has ever tried this on such a large scale, and critics worry these new investors could face big challenges managing large portfolios of dispersed rental houses,” notes a recent article at The New York Times.

For example, large private equity investors like Waypoint, which signed a deal with GI Partners, says it plan to buy 10,000 to 15,000 additional homes by the end of next year.

“We realized that there is a tremendous amount of brain damage around acquiring single-family homes, renovating them, and renting them out,” says Colin Wiel, a co-founder of Waypoint. “We think this is a huge opportunity, and we are going to treat it like a factory and create a production line to do this.”

Investors are seeing big opportunities in the real estate market, with nearly 650,000 foreclosed homes owned by lenders and 710,000 in the foreclosure process, according to housing data from RealtyTrac.

Meanwhile, rental demand is rising and so are rents.

Economists say that investors buying the homes by bulk could help to stabilize the housing market.

“If you have a lot of foreclosures in one community you will improve everybody’s home values if you take them off the market,” Diane Swonk, the chief economist at Mesirow Financial, told The New York Times. “If those homes are renovated and even rented, it is a lot better than having them stand empty.”

Source: “Investors Are Looking to Buy Homes by the Thousands,” The New York Times (April 2, 2012)

“This spring will be the litmus real estate test for housing demand,” says Steven Ricchiuto, chief economist for Mizuho Securities USA.

The sluggish housing market in recent years, which has seen a flood of foreclosures and falling home values, has been inching toward a turnaround in recent weeks. Existing-home sales and pending home sales are up about 9 percent compared to the same time year ago, according to February housing data by the National Association of REALTORS®.

Paul Dales of Capital Economics told USA Today that he expects the spring selling season to “be the best in four or five years” for the real estate industry.

Economists predict that where the housing supply of for-sale homes has dropped the most and is more balanced is where prices have the greatest potential of gaining this year. For example, Phoenix has had a 42 percent drop in its housing inventory recently and is projected to see prices gain 5 percent this year, according to Eric Fox, an economist for Veros Real Estate Solutions.

Source: “Spring Home Sales Could be Omen,” USA Today (April 2, 2012)