If you’re shopping for a home this summer, be prepared to increase your offer for the home you really want. If you’re selling, don’t jump at the first contract.
That’s the takeaway from real estate broker Redfin’s analysis of its June sales figures. For the second month in a row, more than half of the sales the broker handled had multiple offers, meaning the properties were the objects of bidding wars.
The flurry of competition for homes comes in spite of the coronavirus (COVID-19) pandemic, which depressed sales in April and the early part of May. As states have opened up, buyers have returned to look over the limited number of properties for sale. Economic factors could also be at work.
"Bidding wars continue to be fueled by historically low mortgage rates and fewer homes up for sale than almost any time in the last two decades," said Redfin economist Taylor Marr. "It's like a game of musical chairs where only the best bidders get a seat.”
Looking for more space
The new crop of buyers is made up of renters and move-up buyers who have held onto their jobs.
“They’re vying for the small number of single-family homes on the market as they realize they need more space for their families," Marr said.
Record low mortgage rates make homes more affordable. The average mortgage rate fell to 3.03 percent for the week ending July 9, the lowest 30-year fixed-rate number since Freddie Mac began tracking the statistic in 1971.
At the same time, the number of homes for sale in June fell more than 21 percent from the year before. Today, inventory levels are the lowest they’ve been since at least 2012 on a seasonally adjusted basis. The number of new listings fell 12 percent compared to June 2019.
According to Redfin, Boston was the most competitive housing market last month, with more than 72 percent of the brokers’ offers facing at least one competing bid.
"This is the most competitive real estate market I can remember," said James Gulden, who has been a Boston Redfin agent since 2012.
The San Diego and Salt Lake City metros were also extremely competitive last month, with more than 63 percent of Redfin properties attracting competing offers.
A new survey by the National Association of Realtors (NAR) found that the pandemic has changed the housing market in fundamental ways, some of which may be long-lasting. The findings suggest that frustrations with COVID-19 may also be pushing buyers to pursue housing options more aggressively.
“A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy,” said NAR’s chief economist Lawrence Yun. “After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.”
The survey showed that 24 percent of Realtors indicated having buyers who shifted the location of where they intend to buy a house due to the coronavirus. The suburbs, rural areas, and small towns were the top new destinations.