During the last housing boom, competitive bidding on homes was the expectation for home sellers. Easy access to financing made it easy for homebuyers to push their bidding prices up. This time around, bidding wars are due to the short supply of homes on the market. Although there are many factors contributing this shortage, one reason is that many homeowners are concerned they will be unable to qualify for a new mortgage. Realtor.com tracked homes listed for sale in the month of June and found that the average home had been on the market for less than two months. The high turnover in homes for sale signals a high demand and low supply.
Often when a homeowner sells their home, their intent is to trade up to a bigger one. Many homeowners have concerns about the state of the economy. In addition, some homeowners are underwater because their mortgage costs more than the value of their home. Zillow, estimates that 7.9 million homes are still underwater. Not only are home buyers having trouble affording financing, homebuilders are also having a difficult time finding financing.