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Home › Forums › Housing › 32 offers or more in 3 days on a single property › Well, being an economist I

March 4, 2008 at 12:53 PM #164353
yojimbo
Participant

Well, being an economist I guess I’m prone to over analysis. Then again having been involved in the real estate industry for the last 15 years I’ve witnessed jaw dropping “under analysis” from many of those in the industry – and that’s being kind.

Still, in my opinion there is no real pent up demand. Just demand. If a person is in prison and cannot buy a home until they get out then I suppose that is pent up demand. When they get out that demand will be unleashed upon the market. If you had a million people in prison and all of them wanted a $400k home in Santee and could qualify for a loan but couldn’t enter into an enforceable contract until they were released then I might consider that pent up demand. And, if they were all released on the same day that pent up demand would definitely show itself in an upward pricing move in Santee.

Now, to move into my “over analysis” mode. Just because a home that SEEMS to be priced extremely low relative to the market draws a large number of offers from people wanting a home in that area means ABSOLUTELY NOTHING in regard to “pent up” demand. It just means that a lot of people would want that house at that price. And, as DWCAP stated I might actually want most any house in North County if it were priced unbelievably low as well.

The point I was making with regard to the cracked slab and why I feel it is COMPLETELY RELEVANT is that most of the offers written on the property were probably from buyers who didn’t know the home had a cracked slab. Once they conducted their inspection their “demand” disappeared at the price level of their offer. Am I to assume then that their “pent up demand has now changed and they are pent up at about $50k less since they have to fix the slab now?

Offer a home on the cliffs in Malibu for $100k and see how much “pent up” demand there is for it. Then tell all those who wrote offers that it is sitting on top of a toxic waste dump and watch all of that pent up demand disappear.

The thousands of buyers waiting in the wings to buy are just waiting for a particular price point. It’s not a new type of demand – pent up or otherwise. Prices drop – demand rises. The “pent up” phrasing just adds an amount of urgency to the situation which is what most salespeople want to introduce into the buying decision – for obvious reasons.