From boom to bust and back again, residential real estate has seesawed back to multiple offers and bidding wars.
It's not just scattered markets. Across the U.S., real estate agents and analysts report solid home price increases and high demand.
However, home prices across the country are still far below their peak at the end of the boom in 2006.
But market watchers say prices are likely to continue to climb in 2013. It's good news for sellers and a relief for some distressed sellers, whose mortgages were once underwater but may not be anymore. So real estate agents are getting busy.
"Realtors are going back to the basics: They're walking neighborhoods and asking homeowners if they have any interest in selling their homes," said Gary Bauer, an independent property broker in the Denver area who also tracks local real estate statistics.
Bauer says the tactics are working, to a degree: "Basically, we're getting some new inventory on the market. But the buyer pent-up demand is amazing.
Houses Hunted Demand is spiking due to many factors. Employment is up and the economy is improving. Also, individual investors and institutional investors are snapping up distressed properties. But in many cases they're not flipping those homes, they're renting them out, which removes them from the selling pool.
Further, lenders, due to new regulations and the improved economy, are now foreclosing less and doing more loan modifications, thus reducing the distressed home inventory. And analysts say the once-hyped "shadow inventory" — foreclosed or distressed properties that weren't on the market — so far hasn't materialized into the big problem many predicted.
Move-up buyers with equity also are now shopping, before prices ratchet back up and property taxes and interest rates rise. And foreclosed previous homeowners, whose credit has now recovered, are back in the market, with more of them able to return each month.
New construction still hasn't recovered, so buying of existing homes is getting an extra boost. And new household formation "fell to half" its typical rate during the downturn but is recovering, "adding a layer of demand that wasn't there before," said Sam Khater, deputy chief economist with CoreLogic (CLGX).
There are two ways the market can respond, said Khater: "price increases and more supply." In the short term, high demand is "driving up prices," he said.
The proof? Standard & Poor's Case-Shiller 20-city home price index climbed 8.1% in the 12 months ending in January, the latest data available. That was an acceleration from a 6.8% annual gain in December. Prices rose in all cities in the index, led by a 23% gain in Phoenix. Still, across the 20-city index, prices remained nearly 30% off where they were at their peaks in mid-2006.
The inventory drop has been precipitous in many areas.
In South Florida's Broward County, the median price rose as inventory fell in February to 8,630 homes on the market from 15,630 two years earlier, says Summer Greene, regional manager at Better Homes and Gardens Florida 1st Realty in Fort Lauderdale.
"The trend continues," Greene said, as "March's numbers show a median price of $145,000 and inventory of 8,402.
That price is up 24% from a year ago and 51% from two years back.
In her area, Greene says, investor interest and foreign demand are also boosting sales and prices.
Pent-up selling demand now is starting to bring some properties onto the market, however. In the Sacramento area, Elizabeth Weintraub, broker-associate with Lyon Real Estate, says she's been getting some calls. For the past couple of years, Weintraub has specialized in helping underwater sellers do short sales. That is selling a property for less than the amount owed on the mortgage and negotiating with the lender to complete the transaction.
"I probably did more short sales than anybody in Sacramento last year," she said. But now, "Some sellers think they have a short sale but their property is worth more than they thought and it's not a short sale anymore." She says prices have risen "12 to 13%" in her area in the past year and desirable properties are "getting multiple offers.
Positive Equity Real estate website Zillow (Z) says roughly 1 million homeowners will no longer have underwater mortgages by the end of 2013. It says the negative equity rate across the U.S. will drop from 27.5% of homeowners with a mortgage in the fourth quarter of 2012 down to 25.5% by the end of 2013.
Meanwhile, CoreLogic says about 200,000 borrowers escaped their "negative equity" positions during just the fourth quarter of 2012. But it estimates that at the end of 2012, 10.4 million homes, or 21.5% of U.S. homes with a mortgage, remained in negative equity.
Khater says that in a normal environment, "negative equity would be under 5%" of homes with a mortgage. But he says "we're climbing out of the hole very quickly.
Should You Sell Now? So if you want to sell your home, should you do it now or wait for yet higher prices? Experts advise to sell now — nothing is certain in any market. Also, if you're selling and intending to buy too, if you wait you might get more on your sale only to pay more for your next home.
Real estate agents say price your property right and make it look clean and uncluttered. But with high demand, it needn't be perfect.
Also Bauer says sellers need to look at the "entire circle of the transaction ... because you're going to have multiple offers and it's going to go really fast.
He says pay attention to these steps: look objectively at your property and fix issues, check competition — price it right, do your homework and know what you want to buy, get pre-qualified for a loan and get sound, professional advice.
Real estate agents say selling strategies are back to basics and are similar in every market — price it right, make it appealing. Also, they say low appraisals continue to plague the sales process.
"It's still a frustrating issue," said Greene. "Appraisers are always looking in the rearview mirror and that mirror can look back as much as six months. They don't take into account supply and demand.
Some buyers are getting creative to get around low appraisals. In some cases, if it's a multiple-bid situation, a buyer will "close with cash, then get a loan after the fact so they can compete for properties," said Bauer. Also all-cash sales, which don't require an appraisal, then help boost prices in the comparable pool for the next sale, says Greene.