Econintersect: According to a Bloomberg headline “Bidding wars erupt as supply of available homes shrinks.” The article mentions several markets 
where multiple bids for houses are common, including Miami, Seattle, Silicon Valley (CA) and Washington, DC. While some markets may be firming, the national averages are still showing some price distress. As of January, the latest data available, the Case-Shiller home price indices showed a continuing year-over-year price index decline of approximately 4%. So if some markets have bidding wars with rising prices then there must be some markets that are declining significantly more than the index.
The gradual degradation in national average prices over the past two years is clearly seen in the following graph:
The continuing decline is also shown in the following graph from LPS Analytics:
Contrary to longer range expectations, mortgage delinquencies and foreclosures both declined in February (latest data available), as reported in GEI News. However, recent analysis has determined that only about 1/3 of the foreclosed property resales that will ultimately occur have been completed to date. (See GEI Analysis.) So the potential for pricing pressure from distressed properties are likely to remain for some time, potentially a few years.
Realtor Mag, a publication of the NAR (National Association of Realtors) estimates that foreclosures will increase by 25% in 2012 over 2011 and reach a total well above 1 million homes. The magazine points out that if there is an improving economy the pressure on home prices may be reduced as more buyers enter the market. Of course realtors and their professional association are perenially optimistic.
Sources:
- Bidding wars erupt as supply of available homes shrinks (Prashant Gopal and John Gittelsohn, Bloomberg – via Charlotte Sun, 31 March 2012)
- Case-Shiller Home Prices Continue their Decline in January 2012 (Steven Hansen, GEI Analysis, 27 March 2012)
- Mortgage Delinquencies and Foreclosures Decline in February 2012 (GEI News, 24 March 2012)
- Foreclosure Problem Still Has 2/3 to Run (John Lounsbury, GEI Analysis, 12 February 2012)
- Next Foreclosure Wave Coming: Reason for Alarm? (Realtor Mag, 2 April 2012)
