I wrote about the short supply of REO properties in Sonoma County at the end of April. A month later, that shortage continues worse than before. During May 180 REO Sonoma County properties sold. As of the beginning of June only 140 REO properties are in “Active” status compared to 160 in May. This declining inventory position has led to bidding wars for some of the areas in the county. In particular, Rohnert Park at one point last month had only 12 active listings, both REO and regular open market sales. Several transactions I participated in had more than a dozen offers, once with only 48 hours between the property going active on the MLS and bidding closing.
REO Sales in Sonoma County
The seller’s market we are experiencing at the entry level of the market is indicated in the chart. The columns show how many sold in each of the 30 day brackets we use to measure how long a home has been on the market. The line at the top indicates the selling price relative to what was being asked. Everything over the 100 line (right side of the chart to read %) sold for more than asking. You can see that properties that are selling quickly are selling for more than asking price.
There are signs we may be getting additional REO inventory as the banks have resumed their foreclosure cycle after stopping foreclosures earlier this year. Whether the additional inventory will be sufficient to satisfy the current buyer demand remains to be seen. Prices below replacement cost coupled with low interest rates make for very compelling buying incentives. First time buyer credits, now applicable to down payments on FHA insured loans, add even more incentive for some people in the market. My best advice is to pay close attention to trends, stay in touch with your agent, and be prepared with all your paperwork and lending documentation in case the perfect house hits the market. I am always pleased to meet and take on new clients if you are searching for an agent to represent you on the buying side.
dave@sonoma.net