The real estate industry is seeing more competition in suburban markets. FOX Business’ Grady Trimble and more.
Less than a day after real estate agent Andrea White listed a three-bedroom home in Sacramento, California in March, she received a cash offer. The buyer – who has not even seen the house in person – was ready to pay $ 520,000, White said. That was $ 21,000 above the asking price and 37% more than what the seller paid for the farmhouse just two years ago.
Accepting the offer was the easy part. Mrs. White then had to call 17 other agents who had traveled through the house to let them know it was not from the market.
Mrs. White, who works for the Redfin Corp brokerage and has been an agent since 2014, has never seen anything like the sales mania grip her city in Northern California. “It’s exhausting,” she said. “I’m speechless. It’s heartbreaking for buyers; it’s a celebration for sellers.”
FIRST BUYERS FUEL MANHATTAN HOUSING MARKET REVIVAL
The past year has been the most popular selling activity in 14 years. Home values are rising in virtually every corner of the U.S., and average selling prices in dozens of subway areas have plummeted, according to Zillow Group Inc. achieved a double-digit percentage increase from a year ago. 25% in January of a year earlier, while in Stamford, Conn., It rose 19%.
“Prices are going up almost everywhere,” said Mark Vitner, senior economist at Wells Fargo & Co. “It is surprising to see that house prices are rapidly, to this extent, bouncing back to an economic recovery.”
Although the pace of house price increases has been dizzying, it is not difficult to understand what drives the madness. Mortgage rates are near historical lows. Millions of millennials begin their early thirties, the typical age of first-time homebuyers. And the pandemic has spurred the new question: some buyers want more space to work from home, while others are willing to move further away from their offices. Many workers who retained their jobs in 2020 were able to save for installments due to stimulus surveys, tolerance with student loans and less spending on travel and entertainment.
The offer has never been stricter in the meantime. Construction of new homes declined during the 2007-09 recession and remained low in subsequent years. Homeowners also stay longer in their homes, in part because older baby tree farmers stay healthier later in life and prefer not to shrink. According to Realtor.com, the number of homes in March was about half of a year ago. In Austin, Texas, Jacksonville, Fla., And Raleigh, NC, the year-on-year decline was above 70%. (News Corp., parent of The Wall Street Journal, runs Realtor.com.)
The market was rarely so competitive, especially for first-time home buyers or those on a limited budget. Bidding wars are common, and new offers do not last long. According to the National Association of Realtors, nearly three out of every four homes sold in February put on the market in less than a month.
HOUSES SELL FASTER ALWAYS ALL PRICES UP TO ALL TIME HEIGHT
The price for single families across the country rose by 12% in January from a year earlier. This is the largest annual increase in data dating back to 1991, the Federal Housing Financing Agency said this week. All nine regions of the country followed by FHFA achieved price increases of more than 10% on an annual basis.
In February, the average price for existing homes rose 15.8% from a year earlier to $ 313,000, NAR said.
But even as home prices rise rapidly, many homeowners are reluctant to sell because they are worried about competing for another home in the same market, said Redfin chief economist Daryl Fairweather. With mortgage rates so low, many households decided to refinance last year instead of relocating.
More stock could hit the market this spring, which is usually the busiest season for home sales, real estate agents say. But there will probably not be enough new listings to cool the market. Nationally, according to NAR, there was a two-month stock on the market at the end of February, near an all-time low.
Even expensive cities where sales fell last year are showing growth. Manhattan cooperative and apartment sales in the first quarter of 2021 exceeded previous year’s levels for the first time in four quarters, according to Douglas Elliman. In San Francisco, home sales rose 19% in February from a year earlier, according to Redfin.
Homebuilders are trying to increase construction to meet the growing demand. New construction has recovered in recent years due to the lows of the recession, but the country still has a shortage of millions of units. Home building activities slowed down this past spring and increased in the summer. According to builders and economists, the pace of construction is limited by high timber costs, bottlenecks for materials and a shortage of land and labor. Buying interest is so strong that many builders limit how many homes they sell at one time. They want to make sure they are not selling more than they can build.
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Economists and managers expect demand to remain strong this year, and they expect the demographic power to continue for years to come as the great millennial and Gen Z generations get older. Yet there are recent indications that price growth may slow down as more homes enter the market. Rising mortgage rates – which have been at their highest level since June and have risen steadily over the past few weeks – could put some buyers off the price later this year.
Even buyers who are excited about the prospect of owning their first home have been wiped out by the business. Samantha and Doug Hawkins, both 32, moved out of their one-bedroom apartment in Boston when the pandemic struck and went to Hawkins ‘parents’ home. They built up their savings by not paying rent, and me. Hawkins paid off her student loans.
But when they started house hunting late last year, they found it difficult to compete against other bidders. They were told that sellers would not consider offers with less than 20% deposit, Ms. Hawkins, who works in human resources, said.
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After increasing their budget and expanding their search area, the Hawkinses accepted their sixth offer in March for a four-bedroom home in Westford, Massachusetts, further from Boston than they originally looked. They are under contract and expect the deal to close in June.
“We are very proud to be able to do this, and are excited to take the next step in our lives,” she said. Hawkins said. “But having such a competitive market … It just took a little bit of joy out of the process.”