How deep is the pool?

No_Such_Reality_IHB

No_Such_Reality_IHB

New member
Currently the buyer pool is very competitive for properties below $500,000. In other threads, the OC register and first hand experience speaks to the bidding wars and competition erupting on teaser priced properties in the sub $500K range results in tens to hundred plus offers.



A recent property I looked at ended up with over 50 offers and reporting many in the 15-20% over the teaser list price. Putting the likely high bidders in the high 400s. With a 20% down if it's not an all cash deal, the loan will be an old fashion conforming sub $417K.



My question is, how deep does the buyer pool run? I've spoken to other people at the same homes I've looked at. You see the same people, home after home after home. Well, actually, it's week after week after week, because the inventory of realistically priced homes on the market is so spartan, that it's takes weeks to see a few properties that are reasonably price.



So week after week, you see the same 50+ realtor cards, the same 50+ groups checking out the one or two properties that are available.



How deep does that the locust like buyer pool scrambling and fighting over properties run? It may seem indefinite to the realtor currently because buyers aren't drying up. That brings me to two questions: how deep is the pool of buyers for properties in the mid-$400K range. And is pool not drying up because volume is so low or because buyers with the low rate perceive pricing to be competitive with rents?
 
If opinion, I would say very shallow.



Few people I know have $100k in the bank. And even fewer of those people with that cash want to live in what is currently for sale sub $500k.





One way to get some quantifiable data would be to look at how the downpayments are changing with time. I would guess that they would drop as the pool of cash-rich buyers is exhausted, and iirc, IR2's dp data shows that this is happening for Irvine, no?
 
Opinion, data, conjectures, anecdotes, facts. Opine and bloviate at will.



Perhaps a tertiary question. What's it going to take to push the low and mid tier (that's sub $500K currently) down further. As IR's main blog post today (11th) points out, one can start rationalizing rental parity at mid $400s for 3 or 4 bedrooms...



My guess will be the collapse of the upper middle and higher end. The current $600K, $700K and $800K collapsing to the $500K point creating the pancake effect seen in collapsed buildings during quakes. Any swags on timeline or that? This winter? Next winter?



I suspect No_Vase is right in that the current pool is probably 80%+ of the pool...
 
<blockquote>Perhaps a tertiary question. What?s it going to take to push the low and mid tier (that?s sub $500K currently) down further. As IR?s main blog post today (11th) points out, one can start rationalizing rental parity at mid $400s for 3 or 4 bedrooms</blockquote>?







More people like me. our HH income went down 30% last November, and I seriously doubt that it is going back up for at least a year, if not longer.



I bet we see a big, <strong>big drop in median household income</strong> for theOC when the census data comes out.
 
The bidding wars and multiple offer scenarios are by no means limited to properties below 500K. We have seen first-hand that the all-cash buyers and hoards of other buyers are going after properties up the ladder and the multiple offer situations are happening even into the 1.25 million dollar price range. I do however suspect that the buying pool is quite shallow and we are in a race against limited inventory vs. a flood of distressed properties. The other interesting thing is that many of the higher priced properties in distress are turning into bankrupcy sales, which drag on and on. As the bankrupcy courts seem to be overwhelmed this will further delay the flood of high priced REO.
 
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