Big demand; small inventory. Spring home buyers are pounding the pavement at a furious pace, but the pickings are getting ever slimmer, according to recent news reports.
Spring is traditionally the busiest time of year to buy a home, but this year listings are getting snapped up with lightning speed as bidding wars have become par for the course. According to an article in NBC News, home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver’s seat.
The article cites a Realtor in Burbank, CA, who says, ”I’ve been selling real estate for 25 years, and this is the strongest seller’s market I have ever seen in my entire real estate career. A lot of our sellers are optimistically pricing their homes in today’s market, and I have to say in most cases we’re getting the home sold anyway.”
As an example, NBC News reported how a three-bedroom, two bathroom, 1,240-square-foot home in Burbank offered for $789,000 (considered an entry-level home in the LA market) had three offers before the first open house Sunday, drawing more than 100 potential but weary buyers.
As is customary in crazy markets like this, most of the listings are intentionally listed a bit low to garner attention. Then the bidding frenzy ensues, often getting a dozen or more offers on one property. According to the article, more homes came on the market in March, but fierce demand made “sold” signs go up quickly.
“At the end of the month, the supply of homes for sale nationally was down 6.6 percent compared with a year ago, according to the National Association of Realtors. Unsold inventory is a slim 3.8-month supply. A balanced market between buyers and sellers has a five-to-six-month supply. Properties sold in March were on the market for an average 34 days, down from 45 in February and 47 in March 2016.”
All cash offers and contingency removals are common trends because in such a hot market, homes are appraising well below the sale price, making it even harder for first-time, mortgage-dependent buyers to succeed.
All this has caused home prices to hit new peaks each month, with prices nationally up 5.7 percent in February year over year, according to Black Knight Financial Services. Washington, Oregon, and Colorado are seeing the biggest price gains, as buyers flee high prices in California.
Big cities are the all-hat-no-cattle losers, however. Real estate brokerage Redfin studied which markets had the most people searching for homes outside their city. San Francisco, Los Angeles, and New York were the biggest losers.
“Fast-growing coastal cities may be generating the high-paying jobs, but they haven’t created enough budget-friendly housing to keep pace,” said Nela Richardson, Redfin’s chief economist.
“The price of real estate and desire for homeownership is compelling many to uproot and seek housing in more affordable communities.”
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