Fewer Homes, Higher Prices, And Faster Deals
Photo By: Chris Franco
In this market’s limited supply, homebuying today has led to higher prices and more frustration. Weathering housing crashes and watching neighborhoods bounce back we haven’t witnessed anything like the buyer behavior we are seeing this spring.
People are tired of looking at homes and losing bidding wars, buyers are increasingly aggressive and impatient as prices continue to rise and inventories shrink. Prospective buyers constantly ring doorbells, regardless of whether someone else is in the middle of a showing. It’s the most competitive market we’ve ever seen, and we are all doing what we can for our buyers and our sellers.
Homes for sale move with lightning speed. And as prices rise inexorably, competition gets that much more frenzied. The market is like the tide, since inventory seems to go in and out by the hour. The demand continues to far surpass supply, especially in the crucial starter home market. Buying a house has become increasingly challenging. the current situation is merely a continuation of trends that have shaped the last few seasons, especially in expensive market like Los Angeles.
While that’s not surprising in traditionally high-demand markets, data suggests much of the country can be considered a much more competitive landscape. Smaller markets have seen a sharp rise in the frequency of bidding wars for homes (defined as multiple buyers submitting offers over the asking price of a home). Cities like Akron, Ohio; Worcester, Massachusetts; and Lexington, Kentucky have seen the percentage of homes selling over list price jump by more than 80 percent. The share of homes selling for above asking price rose from 17.8 to 24.1 percent between 2012 and 2017, and the median amount over asking price was $7,000. Homes also stayed on the market an average of 81 days nationwide, the fastest pace on record, and nine days faster than 2016.
It’s about supply, or the lack thereof. With the exception of the high-end housing market, where the bulk of new construction activity has been concentrated, a lack of new construction in most of the country has created a blistering market demand. This is not the sign of a healthy housing market We’re still in the hangover phase of the financial crisis. It’s all about affordability. Inventory isn’t keeping up with population growth and demand, and that’s exacerbated by interest rates trending up modestly. There’s an urgency. If you were thinking of buying, there’s a sense that you want to beat the rates.
