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but good homes to buy are scarce
That does not mean good homes will run out of sight in near or far future. Not sure how long this bidding war stuff is going to last.
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http://blog.redfin.com/sfbay/2011/05/bay_area_real_estate_enters_the_twilight_zone_bidding_wars_and_falling_prices_april_insider.html
basically prices are falling, but good homes to buy are scarce. So bidding wars are happening.