Lisa Simpson
Sep 4,2009
In: Finance

Bidding War Rages in the Silicon Valley Market

silicon valley

The Silicon Valley has also been affected by the housing bubble bust. The price of homes has crashed here. The homes in Silicon Valley are attracting many bids at auctions. This is reminiscent of the days of the housing bubble.

Although prices have crashed, first-time buyers are not getting an opportunity to buy the homes. They are being picked up by investors who are making all-cash deals. They ultimately plan to rent out these homes. The investors also feel that they will make a bargain when home prices rise.

In the dot-com phase, the buyers used to make a rush for the properties on the higher end of the scale. This time the trend has reversed and lower-priced houses are selling like hot cakes. Most of these homes are attracting at least 50 bids.

Broker Bill Powers said that the buyer he represents has bid on a home in the Cambrian area of San Jose. Incidentally, the home had got 73 offers from others.

This is not the only one. Another broker says that a home in San Jose that was priced at $299,000 received 112 offers. Ultimately, the house will go to a person who had offered to buy it in cash of $360,000. Brett Mattos of Ventura Barnett Properties, says that there are many who have good cash floating around. He has sold four closures in the recent past and all the buyers have made all-cash deals.

The all-cash offers are putting buyers in a spot. Take, for instance, Navarette of San Jose. He wants to buy a home for himself and family but every time he tries to do it, someone outbids him by paying for the property in all cash. Of course, the bank will give the house to the person who makes an all-cash deal.

Navarette’s broker Rigo Bracamontes says the situation is quite challenging. It has become difficult for an ordinary person to buy a house. Almost always he is being outbid by first-time investors. Bracamontes also says that every foreclosed property is now drawing at least 20 offers. He says that least 80 per cent of houses in East San Jose have been foreclosed properties. Sixteen per cent were short sales, where the buyer pays less than the house is worth.

Brokers however, say that homes in expensive places like Santa Clara are not being sold so quickly. The situation has left the first-time buyers in the lurch.