We’re having a feeding frenzy! If you haven’t been following the real estate market lately, you might have just missed a market bottom go by, here in Palm Springs. If you are a potential investor, don’t wait! I get the impression that if we haven’t hit bottom for properties at the low end of this market, we are darn close to it. That’s not to say prices across the board are at bottom, just prices on homes at the low end of the price range. In our Palm Springs market, I’m talking about single family detached houses priced up to about $200K. These are mostly bank owned REO’s or, in some cases, short sales. At the peak of the market in 2005/2006, these same properties were selling for $400K and up.
We’re having bidding wars. You cannot find a decent home below $200K that doesn’t have multiple bidders after only a few days on the market. In the last four months or so, prices have been bid up, due to requests from the owners for “last and final” bid from their would-be buyers. This phenomenon is driven by the sellers having received multiple offers to purchase. Now, there is always the odd, overpriced, junky house in a horrible location that will just sit on the market, seemingly forever, until its price level descends to the value of the land, but this is the exception. Many of the REO’s now for sale are fine quality homes in decent locations. If an REO stays on the market for more then a few weeks in this market, there is probably something really wrong with it.
Cash Buyers are common. In addition to there being multiple bidders on these houses, another characteristic of this market is that most of the successful buyers are those paying cash. And, guess what? Cash wins every time, especially with the banks which, by the way, are the majority of sellers in this segment of the market. If you are bidding substantially below list price, don’t think that by your paying cash, that factor alone will give you the edge in coming in with the winning bid. Paying cash in this market has become the norm. And with such bargains attracting multiple buyers, the starting bid is usually list price.
Don’t be left out. If real estate investments in this price range are to play a part in your investment portfolio, and you have been waiting for the right time to make your move, that time is now. For more on the subject, please reference the recent MSN Money article, It’s Time to Invest.