David, I don't think that the active to pending ratio is of much use in this wacko market. Short sales are keeping properties pending for months, and many people are complaining of bank sales that drag on for a long time too. This inflates the number of pending properties, and the ratio reflects transaction speed, rather than the health of the market.

I'm seeing that well-priced houses sell, whether they be REOs or standard properties. These properties can generate multiple offers and even sales over low listing prices. But there's a lot of wishful thinking and stale fish out there too. 

I'm wondering how much downward pressure the amazing falls in Watsonville and the San Lorenzo Valley will exert on the rest of the county. When I see a 63% loss in value from the last "real" sale (http://www.redfin.com/CA/Watsonville/114-College-Rd-95076/home/2331870)  I get worried we may be in for more of a fall in Scotts Valley.

I want to buy a house, but I'm not sure when to grab the knife.

You make a good point on the length of the escrows, but some of the REO escrows are being shortened to under 25 days, so maybe that's balancing some of the extended pre-foreclosure short sale escrows.  I'm hearing of cash sales closing inside of 14 days. Also, some listing agents are not putting the homes into pending status until final lender approval has been received.  There is a push in the real estate community to get the agents to follow the rule that once the seller signs the short sale offer the property is placed into pending status until the bank approves the offer, but many don't follow this rule in hopes of finding more buyers, and possibly a higher offer that will be more attractive to the bank.  It puts prospective buyers in a very tough spot, and fills the active inventory with homes that are in limbo.

 I agree with you that the effect of San Lorenzo Valley and Watsonville declines on mid-county coastal corridor market value is a question yet to be answered.  And I absolutely agree that there are stale listings.  If the overpriced inventory comes off the market in the Spring and early Summer (sellers opting for the rental market, or just deciding to stay longer before a planned and now hopeful move) we may see an inventory priced more consistently with actual recently sold listings.

thanks for your thoughtful reply.

David

David,

Many people are listening to realtors and are being told we're at the bottom. This is like listening to a car sales man saying that honda civic is one of a kind. Don't forget that many banks halted forclosures for about 4 months. This made inventory go down, and to the common person without knowledge of this the inventory picture shows that we're near the bottom.

I hope the lift and suspension of mark to market will cause banks to really let their properties loose. 

I don't know the Santa Cruz market, but I know there are a lot of buyers around on the Peninsula. We just closed escrow, but the last few open houses we went to in March were croweded. All those houses are in escrow now, and some had multiple offers.

The question for me is how much of this is seasonal, and how much is actual recovery. Prices are down and volumes are up relative to last spring, but I wouldn't rule out further price drops being needed to keep the market moving over the winter, leading to a lower price level next spring. 

It's all in the pricing; multiple offers and selling above asking mean nothing if the property's deeply discounted to begin with.

That said, it sure feels creepy to bid above asking in this market. A few months ago I dropped out of a non-REO multiple bid situation when we were about $5K above asking, it went up quite a bit from there. The agent priced it low and got a lot of interest and a quick sale.

Simon, we've seen it in the last couple weeks, for sure.

But Iris has a point, what does "overbidding" mean, exactly?  Maybe the house in that neighborhood was put up way under... and maybe the "overbidding" is exactly that for a house that may or may not be worth it, given it's neighborhood or as-is condition.