Multiple Offers Sign of Faltering Buyers Market

By M. Anthony Carr

I've talked with four agents this week who have had contracts beat out by competing buyer offers. This news surprised me, but it shouldn't have. With last month's meltdown in the mortgage industry (actually, more of a purifying), it seems that buyers are starting to come out of the woodwork with good financing in hand to compete with other buyers for houses that are in good shape and priced right.

There are tales of multiple contract offers (when the seller actually gets to choose between offers, instead of beg for one); the use of escalation clauses once again; and sellers holding the line on subsidies to buyers.

This isn't across the whole market, but we're seeing pockets of neighborhoods where if a house comes on the market in great condition and priced at the last sale, the buyers are moving in like chickens after the proverbial flock of June bugs.

Is the buyers market over? Not yet. In fact, in the Washington, DC market area, where last year more than 22,000 houses sold around the District, Virginia and Maryland, there were plenty of homeowners who are walking away with large sums of gain from a market that has doubled in value over the last five years. Nevertheless, they are still having to price right and put the house in marketable -- nay -- “wow-ness” condition to sell them to a group of finicky buyers.

With that said, we are starting to see well-financed buyers put in full-price offers for homes that fit the definition of great condition and pricing. The challenge now is for those real estate agents who don't know how to survive in a buyers market to keep the lights on during this transition market -- which isn't disappearing just yet.

To determine if a market is turning from buyer to seller, you have to look at the same statistics you would research to see if the opposite is true -- a buyers market turning into a sellers market.

The first two stats would be for listings (inventory) and sales (how many sold). Is the inventory retreating over year-to-year numbers? If it is, then how are the sales holding up? With sales maintaining last year levels or moving upward, then the trek up the seller's market mountain has begun.

This doesn't mean sellers can now wait for a better offer, it just means the days on market will start tumbling, which is what has happened month after month in the DC market since February 2007 at 108 days to just 75 days on average in August. The days on market rate has been growing month after month for nearly two years, till it peaked in February, when it started its slow slide town to where it is today.

We'll have to see what happens with the DOM as a result of August's mortgage trials, but if this last week is any indication, the buyers who can qualify for a good mortgage are jumping off the fence, brushing off their jeans and hopping on the Bull.

We've been watching the market turn slowly but surely in the DC area for the last several months, starting with housing sales on Capitol Hill and moving out from there into the Virginia suburbs. The average home sales price in Washington has edged up from $416,000 in January of this year to $516,000 in August. Arlington County, the first county outside the District, is in a thriving market right now, as well.

In Arlington, the average sales price from August to August is up 18 percent, while days on market are clipping along at a spring-like pace at 49 days (barely a month). (The median sold price is up 25 percent).

Is it a buyers market? Yep. But not for long.