Buyers are forced to take risks in this fast-moving market where home prices remained high
Homebuyers in the U.S. have to strike faster than ever to close a deal, forcing many of them to make quick decisions about which home to buy and where to live.
Home sales between July 2020 and June 2021 were on the market for an average period of just one week before entering the contract, according to a survey released Thursday by the National Association of Realtors. That’s down from three weeks a year earlier and marks an all-time low in data going back to 1989.
The rapid turnover helps explain how the number of homes sold rose to multi-year highs during the Covid-19 pandemic, even as the inventory of homes for sale remained stubbornly low.
The pandemic caused an increase in demand for home purchases. Households sought more space to work remotely and benefited from low mortgage interest rates.
At the same time, the supply has been limited. Caution about showing houses during Covid-19, the reluctance of some homeowners to enter the competitive housing market, and the ability to refinance at low rates prevented many potential sellers from listing their homes.
Tools that allowed buyers to tour homes remotely and schedule visits online have also helped speed up the home-buying process in the past year, realtors say.
In such a dynamic market, shoppers have little time to commit to one of the most important purchases of their lives, and sometimes they forgo traditional safeguards. Many buyers have given up their rights to terminate a contract due to a low appraisal or unfavorable inspection to make their bids more competitive in a bidding war.
“There is no mapping of where the Christmas tree will be and the measurement of a sofa in that setting,” said Jessica Lautz, vice president of demographic and behavioral information at NAR. “You really are making that decision very fast.”.
In September, the markets where homes sold the fastest were Indianapolis; Denver; Grand Rapids, Michigan; Seattle and Tacoma, Washington, according to real estate brokerage Redfin Corp.
Homes typically sell slightly below their listing price, but in the year ending in June, the median selling price was 100% of listing price, the highest since NAR began tracking data in 2002. The median sales price for that period was $ 305,000, up from $ 272,500 a year earlier, NAR said.
The continuing shortage of homes on the market means that many buyers are left on the sidelines. About two-thirds of active buyers have been looking for a home for at least three months, according to a September survey by the National Association of Home Builders. About 45% of those buyers said they were unsuccessful because other buyers kept outbidding their offers.
The hot housing market has cooled slightly in recent months, but realtors say many homes are still selling quickly and with multiple offers. Active listings in the four weeks ending October 31 were down 22% from a year earlier, according to Redfin.
“Instead of a house that lasts three days on the market, it lasts seven days,” said Harold Torres, a real estate agent in Orlando, Florida. For buyers, “the negotiation and any kind of room for maneuver do not exist yet.”
The NAR survey also showed that buyers didn’t venture far when buying a new home. The typical distance between a buyer’s previous residence and the new era of just 15 miles in the year ending in June, the survey showed. Buyers said their top reasons for choosing an area were the quality of the neighborhood and convenience for friends and family, a change from the previous year when affordability and convenience for jobs outpaced proximity to friends and family.