Equilibrium

I have a co-worker who is in the enviable position of purchasing her first home. I say enviable because she does not have a house she is currently looking to sell, and most sellers are taking a bath on the value of their homes and their debt load, and interest rates are at a historic low. (30 year mortage rate is currently 4.625%).

She's looking in South Minneapolis and has come across a couple of foreclosed homes, selling well below market value. Other non-foreclosed homes that they've looked at are thousands higher than the foreclosed ones, and on the high end of their price range.

This past week she put a bid in on a foreclosed home -- it's within their price range and they offered the asking price. Today she found out that there are six bids in on the home, so now begins the bidding war.

So perhaps, through all of this, equilibrium will be reached. Some of the foreclosed homes may sell for a more reasonable price, thus not de-valuing neighboring properties as much as homeowners fear. And in the meantime, other homes which are exorbitantly overpriced will have to lower their prices to compete.

Hang tight, it'll be an interesting ride!