Bidding Wars Keep Lid on Home Prices

By Ryan Jackson

Home prices for most homeowners remained flat during the month of April, according to a monthly survey of real estate agents. The closely listed homes for sale monitored Campbell Inside Mortgage Finance survey found that the average home listed on the market for sale only obtained two or three offers and sold for under list price.

Home prices also declined slightly from March to April, according to survey respondents. The monthly study surveys about 2,500 real estate agents across the U.S. to provide up to date information on home sales and mortgage patterns.

Despite bidding wars in some areas of the country, including hard hit Florida and California average home prices are rising in a select few number of cities. The survey also found that non-distress properties declined 1.5% from March levels through April, and home values fell 1.4% on foreclosures, which show signs of damage.

Despite homes being sold above list price in bidding wars in some regions of the country, survey statistics show that average ratios of sale prices to listing prices continued to be below 100% during the month of April.

Average home sale prices were below list prices for all four categories of properties covered by the survey—non-distressed, damaged REO, move-in ready REO and short sales. Non-distressed properties or homes that are neither bank assisted short sales or foreclosures sold for an average of 95% of list price in April.

Home prices continue to be held down by a high share of distressed properties, especially short sales. The total share of distressed properties in the housing market in April, as represented by the Housing Pulse Distressed Property Index, was 47.9%, using a three-month moving average. It was the 26th straight month that the index has been above 40%.

Even when potential home buyers bid over the asking price to purchase a home, appraisals often come in at less than what is required for mortgage financing to prevent transactions from closing at higher prices.