|Real estate has finally started to bounce back across the country -- even roar back in some places. Low mortgage rates and pent-up demand have coaxed buyers back into the market, and homeowners who list their houses are seeing more traffic. That quaint relic of the bubble, the bidding war, has even started to re-emerge in some cities. Consider the mounting evidence that the long national real estate nightmare is over: During the past year, home prices increased in 92 of the country's 100 largest metropolitan areas, according to data provider CoreLogic, with prices rising as high as 23 percent in Phoenix and 17 percent in San Francisco. Sales volume rose in 69 of the top 100 markets, and 35 of those showed double-digit gains.|
Yet while most economists agree that the bottom is behind us and the five-year outlook for housing is on solid footing, the shorter term is shakier. "2013 and 2014 are going to be transition years," says Mark Fleming, CoreLogic's chief economist. "The market's improving, but it's not totally healed."
Thinking about buying a home? For the first time in more than half a decade, the economics of the market are working against you in most places. Inventory is tight, and bidding wars are back in some parts of the country. To snag your dream home, you'll have to pay up and contend with continuing strict loan requirements. The bright side: Despite rising prices and mortgage rates that are edging upward, buying a home is still cheaper than renting in the majority of the top 100 markets.
Don't Waste Time With a Low-Ball Offer
Yes, home prices are still way down from their highs, but the days when you could scoop up a house for 20% less than the list price are long gone. The typical home sells for pretty close to what the owners asked for, and even in shaky markets, sellers have gotten more realistic about pricing. The median sales-to-list-price ratio in Detroit, for example, is 98 percent; the national number is 97 percent. (To find the figure for your market, go to zillow.com/local-info and click on "More metrics.")
Here's how to figure out how much to offer initially: In places where homes are still selling below list price but deals are being made in less than two months, come in no more than 2% to 3% below the asking price, says Michael Murphree, a realtor in Birmingham, Ala. Where homes are selling above the listing price, make your first offer the asking price.
Be the Winner in a Bidding War
In January and February, 73percent of agents with broker Redfin said their clients' offers faced rival bids, up from 56% who said so in the fall of 2011. You win bidding wars, of course, by raising your price; it also helps to have few contingencies and to move quickly, since today's sellers don't want multiple go-rounds. "You have to give your best offer," says Dallas real estate agent Mary Beth Harrison. "Step up to the plate or walk away."
Be flexible about closing too: Quick deals -- the median time on the market for homes is 71 days, down from 99 a year ago -- have left many sellers scrambling for alternative housing. Leave the closing date blank on your contract for the seller to fill in, or negotiate a leaseback if the seller needs to stay put for a while.