Report: High Sold-to-List Price Ratio Confirms Bidding War Activity 05/21/2013

Last year, some analysts were speculating the large supply of REOs and shadow inventory would keep the market depressed, but instead, the market is dealing with a lack of inventory available for sale, ProTeck Valuation Services noted in its May Home Value Forecast (HVF).

“[I]n reality the shortage of housing inventory has led buyers to bid more competitively against one another leading to significant home price increases and tighter housing conditions,” said Tom O’Grady, CEO of Pro Teck. “Aside from anecdotal stories, Home Value Forecast shows that one of the most reliable leading indicators to support this theory is the Sold-To- List Price ratio.”

According to the report authors, the sold-to-list price ratio tends to land somewhere in the range of 92 and 98 percent, but in high demand markets, the ratio can exceed 100 percent.

For example, in the San Francisco Bay area, nearly all ZIP codes showed sold-to-list-price-ratios close to or above 100 percent, confirming stories of bidding wars, according to Pro Teck’s analysis, 
On the other hand, the Chicago area’s sold-to-list-price-ratio pointed to more normal conditions, with much fewer ZIP codes with ratios close to or above 100 percent.

“The Sold-to-Listed Price Ratio has historically led home prices by approximately six months over the past three real estate cycles and its turning points have been excellent signals for the same in condo prices,” added O’Grady.

As always, the HVF provided a list of the month’s 10 best and worst performing markets out of 200 Core Based Statistical Areas (CBSAs) based on factors such as sales/listing activity and prices, months of remaining inventory (MRI), days on market (DOM), sold-to-list price ratio, and foreclosure and REOactivity.

Michael Sklarz, principal of Collateral Analytics and report co-author, noted two of the top markets are in Nevada, while California continues to be well represented on the list.

The authors also pointed out that several of the top markets from late last year fell off the list since their year-over-year sales counts are down due to a lack of inventory.

“The bottom ranked metros also represent an interesting mix around the U.S. While all have nine to thirteen Months of Remaining Inventory, many of the indicators are showing positive trends even for the bottom metros area this month,” added Sklarz.


  1. Nashville-Davidson-Murfreesboro-Franklin
  2. Sacramento-Arden-Arcade-Roseville
  3. Oakland-Fremont-Hayward, California
  4. Reno-Sparks
  5. Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin
  6. Las Vegas-Paradise
  7. Warren-Troy-Farmington Hills, Michigan
  8. Salt Lake City
  9. Los Angeles-Long Beach-Glendale
  10. Dallas-Plano-Irving

Bottom CBSAs

  1. El Paso, Texas
  2. Shreveport-Bossier City, Iowa
  3. Akron, Ohio
  4. Spokane, Washington
  5. Chattanooga, Tennesee-Georgia
  6. Dayton, Ohio
  7. Peoria, Illionis
  8. Baltimore-Towson
  9. Little Rock-North Little Rock-Conway, Arkansas
  10. Clarksville, Tennessee-Kentucky



Trulia: Home Price Recovery Not Shaping into Another Bubble

While home prices are rising today nearly as fast as they did during the peak bubble years of 2005 and 2006, Truliareassures “bubble-phobes” that they can rest easy in its latest report.

The company tossed its two cents into the bubble debate with the release of Trulia Bubble Watch, a report that compares various price indexes (including Trulia’s own Price Monitor) to per-capita income and rent data obtained from government releases.

According to Trulia’s findings, home prices are still 7 percent undervalued nationally, having come down from a peak of 39 percent overvalued in 2006. After the bubble burst, prices fell to being 15 percent undervalued at the end of 2011.

With prices still undervalued relative to fundamentals, Trulia insists that today’s rapid improvements still qualify as a rebound, not a new bubble.

“Home prices fell so much after the last bubble burst that they still remain below normal levels even as prices rise sharply today,” explained Trulia chief economist Jed Kolko. “Several forces are waiting in the wings that should slow down today’s rapid price gains before they rise into bubble territory again. More inventory, higher mortgage rates, and fading investor activity would each take home-price gains down a notch.”

That said, it’s still important to remain cautious. According to the report, eight of the country’s 100 largest metros are showing evidence of overvalued prices, including four in California (including Orange County, Los Angeles, San Jose, and San Francisco) and three in Texas (Austin, San Antonio, and Houston).

“Although we’re far from bubble territory today, there’ll be another home-price bubble someday, somewhere,” said Kolko said. “The history of American real estate is full of speculation, bubbles, and busts. Even now, most people expect home prices to get back to the peak of the previous bubble again in the next 10 years. Prices may be far from bubble levels today, but we need to stay on guard for signs of the next bubble.”



Survey: Confidence in Home Price Gains Reaches Record Level

April saw continued growth in American optimism when it comes to housing health, according to results in Fannie Mae’smonthly National Housing Survey.


More than half of those who took the survey (51 percent, up from 48 percent in March) said they expect home prices to climb in the next year, while 10 percent—flat for the fourth straight month—expect declines. Thirty-five percent expect no changes.

April’s report marks the first time in the survey’s three-year history that more than half of respondents projected price gains. As of April 2012, only about a third (32 percent) of those surveyed said they anticipated price gains.

The average 12-month price change expectation was 2.7 percent, flat from March and down from February’s high of 2.9 percent.

“Crossing the 50 percent threshold marks a significant milestone as most Americans believe a housing recovery is truly occurring throughout the country,” said Doug Duncan, SVP and chief economist at Fannie Mae.

“Reflecting that increased optimism toward housing, the share of Americans who think it is a good time to sell has doubled during the last year. Many homeowners who have been underwater are gradually returning to positive equity, and selling is now becoming an available and attractive option again.”

The share of respondents who say now is a good time to sell rose 4 percentage points in April to land at 30 percent—double the percentage recorded last April. With market data showing that five out of eight people who buy a home have to sell their own home first, Fannie Mae says the “increasing optimism toward the selling market may bode well for continued improvement in housing activity.”

The share of those saying now is a good time to buy held steady at 71 percent. Meanwhile, the share of respondents who said they would buy if they were going to move (as opposed to rent) increased slightly to 65 percent.

In broader economic matters, 39 percent of those surveyed said they believe the economy is on the right track, up 4 percentage points over March. Fifty-six percent said the economy is on the wrong track, down from 58 percent.

One-fifth of respondents said their household income is significantly higher than it was a year ago, flat from March, while 16 percent said their income is lower, down from 17 percent.

The consumer outlook picked up, as well: The percentage of people who expect their personal situation to get worse over the next 12 months fell 5 percentage points to 16 percent, while the percentage of those expecting their situation to improve rose to 43 percent—just under last April’s 44 percent.

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