If the first month of 2021 is any indication, the U.S. housing market will be even hotter than it was last year. A new report from Realtor.com says this year’s buyers need to be prepared to act quickly.
In its monthly Housing Trends Report, the online real estate marketplace said buyers aren’t waiting until spring when the market normally gets hot. With record low inventory, it says the market has become “fiercely competitive” to start the year.
"Demand for housing was already strong coming into the year and we don't see that slowing down with millennials reaching prime home-buying age, and many remote workers still in the market for more space," said realtor.com Chief Economist Danielle Hale.
At the same time, Hale says sellers failed to materialize in January, pushing the number of homes for sale to new lows and suggesting that the new normal of rising prices and brisk sales will continue through at least the first half of 2021.
“Those thinking of getting into the market this spring should brace themselves for a competitive season, especially in the market for existing homes," Hale said.
76 days on the market
The report shows the typical U.S. home spent 76 days on the market in January, 10 fewer days than last year. The decline in days on market slowed compared to December 2020, when homes sold 13 days more quickly than the previous year.
Homes are selling faster in spite of rising asking prices. In a separate report, real estate broker Redfin found that asking prices for newly-listed homes hit a new all-time record of $330,225, up 10 percent from the same time a year ago.
In a bad sign for buyers, asking prices typically do not pass the previous year's peak until March. Redfin says the early spike in asking prices suggests that this coming spring will see stronger price growth than is typical this time of year.
"With more and more homes going off the market before buyers have had a chance to tour them, it has never been more important for homebuyers to be well prepared," said Redfin’s chief economist Daryl Fairweather.
First, get prepared
Fairweather says buyers need to spend some time preparing before they think about looking at houses. Working with an experienced and well-qualified real estate agent who knows the local market will make the entire process easier.
After selecting an agent, buyers need to get “pre-approved” for a mortgage. A lender will look over a buyer’s finances and credit history and will issue a letter saying the applicant has been pre-approved for a loan of a certain amount.
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With a pre-approval letter in hand, you can begin looking at homes. Keep in mind that others may offer more than the asking price and starting a bidding war. It’s prudent to focus on homes in the middle of your price range instead of the top. You may have to offer a little more to get the house of your dreams.