When it comes to bidding wars, the real estate equivalent of arms control is a combination of reason, restraint, research, field reporting and fact checking. The key questions are: (1) What’s really happening, and (2) what’s the impact on individual home buying opportunities and housing markets across Massachusetts? As with our award-winning Real Estate Bubble Map in 2006, The Real Estate Cafe wants your help to crowdsource bidding wars. We can provide MLS data but need field observations and war stories, particularly if you’ve been wronged (would you believe there have already been 5,000 complaints received in Toronto?). And as before, we’re prepared to reward contributions with commission rebate credits.
First pass: Bidding wars in Top 10 housing markets in MA
Rather than addressing the entire market right away, our first pass was to take a snap shot of MLS residential listings in the top 10 cities, neighborhoods, and towns in Massachusetts, as defined by the Warren Group and Boston Globe Magazine, between March 1 and April 5, 2012. Then to slice the data more narrowly, we focused on listings that have been on the market for 7 days or less, or gone under agreement within 7 days or less during the same period. That data query resulted in 299 properties across the Top 10 towns. Here’s what we found:
- 40% of the NEW listings are still active;
- 42% (of this sample, not all new listings) are already under agreement; and
- One in ten properties have already closed — presumably cash buyers.
Here’s the good news if you’re a homebuyer: Only 13 of the properties that have been on the market for one week or less sold for OVER ASKING PRICE. That’s just 4% of the 299 listings identified in the Top 10 housing markets across MA. Hardly a compelling indicator that the housing market is roaring back, and nothing close to “people trying to get on the last lifeboat on the Titanic,” as one bombastic listing agent boasted two weeks ago in a front page story in the Boston Globe.
But let’s return to the data in our limited sample before rushing to conclusions.
Of the 31 sales that closed in a week or less, 42% sold for over asking price. That sounds ominous until you realize, once again, that we’re talking about thirteen listings in the Top 10 towns. Would you believe that three of those bids were $1,100 or less over asking price? Not exactly a show of strength from cash buyers, and hardly the stuff of headlines.
So what made front page news? Some listing agents are quick to sensationalize, so that fact that prices were driven more than 5% above the original asking price sounds like a market on fire. That only occurred in six of the 299 listings in our preliminary data analysis, and the details are revealing:
- Two properties were priced about 15% below their assessed values and sold for about 10% below their assessed values;
- Two properties were located in Cambridge where the People’s Republic has been replaced by the Poupon Republic; and
- Two luxury condos priced over $1M in Back Bay generated bids approximately $100K over asking price. (That may say more about the difference between the 1% and the rest of us, than it does about the housing market).
Stay tuned for the rest of the story
When others reported that 15% percent of the homes put on the market in Greater Boston during 2012 have gone to contract within three days, buyers may have assumed many of those homes were selling over asking price. So far, looking at the narrow market slice described above, we’ve only identified 13 sales over asking price between March 1st and April 5th, but nearly 100 more properties are under agreement. As their sale prices become public in coming weeks, we’ll know more about what’s really going on.
Until then, we encourage buyers to act prudently, and don’t fall for fear or pressure tactics that could cause you to bid unnecessarily over asking prices. Further, we invite you to click on the button below to make an appointment to:
- Learn how Real Estate Cafe buyers can use our 100% commission rebate (as seen in the Wall Street Journal) to prevail in bidding wars, if they chose to paricipate; and
- Learn how you can earn commission rebate credits by crowdsourcing what’s really going on with bidding wars.
We’re available tomorrow April 7 at BarCamp Boston or at your earliest convenience, online or off. If it’s urgent, just call us at 617-661-4046.