Skittish Bidding Wars?
The Wall Street Journal reports, “For the second time in history — and the second time in as many months — average rates on 30-year fixed-rate mortgages fell below 4 percent.”
This might explain why, a week or so before Thanksgiving and the start of the usual holiday lull, we are still seeing isolated bidding wars on reasonably priced homes in consistently desirable towns. My colleague just received four offers on a listing for a 1,700-square-foot modular home without a garage on a busy road, priced below $650,000.
Which is not to say it is back to the crazy seller’s markets of yore. Word on the street is that the highest winning bidder on this one backed out immediately. And sometimes those other bidders breathe a sigh of relief and do not come back to the table, spooked away from the process for the time being.
A house we signed under agreement this weekend was on the market in the same price range, though for 65 days. While this is not a horribly long period of time in this economy, the first weekend had just under 100 parties through, with potential buyers and brokers literally tripping over each other, asking how and when they could get their offers in. When the appointed time arrived, all we heard were crickets. Nobody wanted to get into a multiple bidding war. And so no one bid. And they all seemingly moved on.
In the end, we brought our own buyer clients. After helping them sell their house in Watertown, we were able to broker a sale that (so far) has both sides satisfied with a fair deal. But as with the sale of their Watertown house, we will all be on pins and needles waiting for the appraisal. We have no specific reason to worry, as the house is priced right in line with similar houses in the same neighborhood. But nothing is guaranteed in the post-mortgage-meltdown climate, which has everyone spooked — lenders, appraisers, buyers, and sellers. Not to mention us brokers. Everyone watches, reads, and/or listens to national news. Though all markets are hyper-local (nevermind state or town; it depends on neighborhoods within the towns), the bad things that happened 3,000 miles away still affect the lenders and appraisers, as well as the market psychology elsewhere. The fundamentals are still relatively strong in the Boston and Cambridge area. Nevertheless, skittishness abounds. Properties are selling, but everyone seems to be looking over their shoulder, flinching.
Looking at some sample numbers in Lexington from the past three months, for houses priced under $900,000, there are 46 single family houses on market for an average of 105 days. In the same time period, there are 22 pending sales, with an average of 72 days on market. And there have been 53 sales with an average of 92 days on the market, closing within 95 percent of their original asking price, 98 percent of the final list price (reflecting price changes).
Newton is a much larger city than the town of Lexington, but the story is similar: 93 days on average for 115 active listings; 63 days for 36 pending sales; and 83 days on average for 88 closed sales, within 93 percent of original price and and 96 percent of final list.
Wellesley is a higher priced town, but there have been about half as many closings in the under-$900k price range as Lexington during that time. And readers may be surprised to know that there are currently 54 active and available listings in Wellesley priced under $900,000, about half of them priced between $600k-800k.