People wait to visit a home for sale in Floral Park, Nassau County, New York, United States, on September 6, 2020.
Wany Ying | Xinhua News Agency | Getty Images
The President’s Day weekend marks the unofficial start of the spring real estate market, but if you’re thinking about entering this year, keep your wallet. Bidding wars are off the chart, even with house prices skyrocketing.
The main reason long-term users have not yet purchased a home is because they continue to receive outdated offers. About 40% of potential buyers cited this in a new survey by the National Association of Home Builders. The reasons were reversed in relation to the previous year, when 44% said that inaccessible prices were the biggest reason for not having bought yet, and 19% cited having been surpassed.
Well over half of all buyers, 56%, faced bidding wars in their bids in January, according to a Redfin survey. This is a 52% increase in December. More than half of the houses are being contracted in less than two weeks.
“With so few new ads hitting the market, I expect bidding wars to become more common and involve even more potential buyers as we enter the spring home buying season,” said Daryl Fairweather, chief economist at Redfin .
She advises buyers to be ready to see properties as soon as they hit the market and to be pre-approved for a mortgage.
“But know when to back off if the price goes up more than you are willing to pay,” added Fairweather.
Competition is fierce across the country, but worse in Salt Lake City, where 9 out of 10 offers have faced competition, according to Redfin research in 24 major markets. It was followed by San Diego (78.9%), Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).
The problem is the supply, or the lack of it – record low supply. The sudden strong demand, driven by the culture of staying at home in the Covid pandemic, quickly hit the already low stock due to lackluster residential construction. Record-low mortgage rates only increased demand.
Paul Legere is a buying agent for the Joel Nelson Group in Washington, DC He says his job is getting more and more difficult.
“The low cost of money now has buyers who are able to be more aggressive and willing to overpay for properties. As a buyer’s agent, charged with trying to help customers find value, that part of the equation is almost impossible to do, ”said Legere. “It is a constant struggle to find desirable targets.”
Sellers also backed off, not wanting to go through the ordeal of putting their homes up for sale during Covid. The number of newly listed homes in January fell 29% year on year, pushing the total inventory down 47%, according to realtor.com.
House prices had appreciated at a double-digit rate each week for 26 consecutive weeks before January. The average listing price of a home has gone up almost 13% compared to January 2020.
“Lower mortgage rates are making monthly payments for higher priced homes more manageable,” said Danielle Hale, chief economist at realtor.com. “But finding a home that checks the right boxes in the midst of limited supply and saving to pay for the larger entry required with higher home prices remains a challenge, especially for first time home buyers who have not accumulated equity as prices have gone up. . “