She listed a fixer-upper in suburban Washington, DC on Thursday for $ 275,000. As of Sunday evening, he had 88 offers.
“Offers just kept coming,” he said. “I felt like Lucy with chocolate. I’m thinking, ‘This is just out of control.’
Of those 88 offers, 76 were all-cash, said Coleman, who works for the RE / MAX Realty Center. Not all bidders had enough time to tour the property. She said that 15 proposals were unseen.
The four-bedroom, 1,800-square-foot house sold for $ 460,000, a nearly 70% increase over the asking price. He said the winning bid was not the highest offer, but it was cash with no contingency and was replaced by paperwork. The buyer, he said, is an investor who is likely to renew and resell at an even higher price.
“It was a low-priced property for the area and could be an outlier,” she said. But even her other listings have generally been close to 15 offers. “Many wanted them to own the house and repair themselves. There is so little inventory out there and people feel that this is a way that they can get into the house.”
Why are tears at home prices?
But when the sale of the house returned last May, there was no inventory.
“It has been the subject since then,” he said. “As a result, prices are going on a tear due to supply shortages.”
According to the National Association of Realtors, the average price of a house has risen 16% since last year, and they have gone up even more in some areas of the country, such as the Northeast and West, up 21% from the previous year.
In the meantime, inventory has steadily continued at record lows. In February, the number of homes available for sale was down by about 30% from a year earlier.
Disappointed buyers want to know when it ends?
Brad Dillman, chief economist at multinational real estate development company Cortland, said, “In the second half of this year we will see higher mortgage rates and as they stick, it will cool.”
“Homes will sit on the market for a longer period of time, markets will accumulate more active listings. Home construction will continue and new homes will pile up a bit. They will continue to moderate price appreciation.”
But this does not mean that homes will be more affordable for buyers.
Looking at the biggest price increases, house prices were up 10.4% at the end of 2020 compared to the year, according to the S&P CoreLogic Case-Schiller US National Home Price NSA Index, with cities such as Phoenix, Seattle and San Diego.
“I don’t think people are getting their incomes up by 10.4% or have a savings rate to get those benefits,” Dillman said. “It’s competition for a house that’s raising the price.”
Why are there no homes to buy?
Even in a seller market, many people are avoiding the panic they’ll face and putting in finding their next home, said Liz Brent, a broker and founder of GoBrent, a real estate firm in Maryland.
Millions of homeowners have taken advantage of record low interest rates over the past year to refinance over a lower rate, more affordable payments or a shorter loan term on their existing mortgage. Brent said those homeowners are unlikely to move soon.
“People want to think it’s coronovirus-related,” Brent said. “Yes, there are people who do not want to sell because of the epidemic, but we are in a housing crisis that has been building for years.”
And more competition for fewer homes that sell at ever higher prices is pushing the goal post forward for many buyers, who are especially trying to save first-time buyers.
Brent said, “Unfortunately when you have 5, 10, 15, 25 offers on a house, the only buyers to buy the house are those who are extremely financially secure and the buyers who want to say ‘I Will pay almost anything ‘, Brent said.
Buy now or sit outside?
Even in the last one year in the form of inventory, the pool of buyers has increased, said Carlo Siracusa, president of residential brokerage in Weichert.
“Inventory will remain tight for a while because all these buyers are coming into the market – urban dwellers, Millennials, first-time buyers – looking for a bigger space or somewhere new to live,” he said.
Siracusa does not think it makes sense if you are ready to buy now. “Interest rates will go up. But there is no indication that real estate prices will go down. Demand is strong, supply is low.”
More inventory is expected to be available later this spring, said Daniel Hale, chief economist at Realtor.com. This would at least provide more selection, but not necessarily a price relief.
More sellers usually show up in early May, she said, but there will still be more buyers than homes. So if buyers are sitting outside waiting for lower prices, they may be disappointed.
There is a point at which some frenzy of demand will slow down, Hale said. When people cannot qualify for a home loan they would prefer to stay or when renting makes more sense, they may be out of search and the pace of price increases will slow.
“But prices will remain stable or continue to rise, as there will still be more buyers than sellers, and interest rates will rise,” she said.
Melissa Cohan, an executive mortgage banker with William Ravis Mortgage, said, “If you like that house and you can like it, that house is not going to last long.” “If you’re comfortable you can buy it, you should go ahead. Interest rates will go up. It’s sure.”
She said that usually when rates rise, house prices go down – or at least stop rising so fast. But not immediately and not everywhere.
Cohan said the housing market would eventually cool. “But this does not mean that prices will fall by 20%.”