Well, anyone in the housing market today doesn’t need to be told, it’s brutal if you are a buyer competing for the purchase of a home. The process can be just as overwhelming however for the seller, sifting through 20 offers, trying to choose just the right one with the minimal amount of risk.

California homes sales of over $1M or more rose to the highest level in six years.  Lack of inventory contributed to higher housing sale prices that have risen on average between 20% and 30% over the past year. So how do you compete as a buyer in this marketplace?

As reported by Data Quick, a San Diego Company that  monitors real estate activity nationwide, a record number of CA homes were purchased for cash in 2013. Last year over 10,000 homes that sold for over $1M were purchased in this fashion, which is a 20% increase from 2012. In multiple offer situations, cash is the preferred medium of exchange. For the seller, a cash offer with no contingencies is almost a closed deal which is very reassuring.

Not everyone has cash of course, so how do you have a competitive edge when you require a loan? Of the properties that did sell with financing their median down payment was 30%. The higher down-payment, lowers the banks liability, which is of paramount importance to a lender when considering a loan on a property that has just gone into contract at a higher price than the comparables. Remember real estate markets fluctuate, lenders remember this. But with foreclosures down to a 8 year low due to increase housing valuation we get a little short sighted and forget there can be an economic downturn.

January sales prices are up 25 % higher than last year due to a lack of inventory and hungry buyers. This makes it a challenging marketplace for everyone. Now I don’t have a crystal ball but some buyers may decide to wait the market out so they don’t have to get caught up in the multiple offer, overbidding war.   When there are no longer as many buyers, housing prices will start to drop. As we approach Spring sellers will begin to make the move to put their properties on the market boosting our supply. Hopefully with these two factors working together we will see some price stabilization.  Historically January is always slow because sellers want to wait for the daffodils in Spring but after the first of the year the buyers are ready to go!