Purchasing power down by 18%, bidding war backlash next?

Today, a Boston.com blog reader complained, “More and more, I feel like the majority of topics in this blog are designed to scare homebuyers, and especially discourgage first-timers.” Our response? What’s scarier: (1) to remain silent regarding the games real estate agents play — like Pocket Listings, today’s topic, or (2) to build awareness of all of the potential risks of buying in this “totally artificial housing market?”

Here’s the latest shocker:  According industry press today, rising mortgage rates have reduced a buyer’s maximum purchase price by 18% since May 1st:

http://bit.ly/18pctLess (Please share this Tiny URL with friends via social media)

As the Fed’s 33% purchasing power bonus fades to zero, wonder if any buyers who were so eager to pounce on a Pocket Listing will feel like they were misled about “low inventory” and look for someone to blame?  Sound outlandish? Consider this metaphor and what happened in 2008:

Imagine there’s a playoff game , what would happen to the value of tickets if one-third of the seats in the stadium or arena were scalped and sold privately?

Similarly, to some unknown degree, Pocket Listings cut into the supply of known listings this Spring in Greater Boston, creating a heightened sense of scarcity which fanned bidding war frenzy, and drove prices to unsustainable levels in some communities.

Will bidding war backlash be next?  We HOPE so!

What happened the last time homebuyers felt betrayed?  If this NYTimes article resonates with you, we’d love to hear from you:  Feeling Misled on Home Price, Buyers Sue Agent

There was a time when the Boston Globe had a real estate column called Consumer Watch, which focused on issues that should concern ALL buyers.  In the absence of that, an informal national network of real estate consumer advocates invites you to join or follow RECALL: Real Estate Consumer Alliance, our new community on Google+:

http://bit.ly/FollowRECALL

Posted in Bidding wars, Bubble Hour, Buyer agent, Consumer protection, Defensive Homebuying, Dual Agency Detective, Housing bubble, Pocket Listings, Proactive househunting, Real Estate Bubble, RECALL: Real Estate Consumer Alliance

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