Less than a day after real estate agent Andrea White listed a three-bedroom house for sale in Sacramento, California, in March, she received an all-cash offer. Ms. White said that the buyer-who has not even seen the house in person-was willing to pay $520,000. This is $21,000 higher than the asking price and 37% higher than the price the seller paid for the ranch house two years ago.
Accepting the offer is an easy task. Ms. White then had to call another 1
Ms. White works for the brokerage company Redfin Corp. and has been a broker since 2014. She had never seen a city in Northern California that plagued her like a sales frenzy. She said: “It’s tiring.” “I’m speechless. It’s heartbreaking for the buyer; it’s a celebration for the seller.”
First-time homebuyers’ transformation of the Manhattan housing market
The past year was the hottest sales activity in 14 years. Data from Zillow Group Inc. shows that housing prices in almost every corner of the United States are rising, and the median house price in dozens of metropolitan areas has increased by double digits over the same period last year. In Boise, Idaho, the median house price rose almost 25% year-on-year in January, while in Stamford, Connecticut, it rose 19% year-on-year.
Mark Vitner, a senior economist at Wells Fargo & Co, said: “House prices are rising almost everywhere. It’s surprising that house prices rebounded so fast and recovered sooner. Economic recovery.”
Although the rate of house price increases is dizzying and confusing, it is not difficult to understand what drives the madness. Mortgage interest rates are near historical lows. Thousands of millennials are entering the early 1930s, which is the typical age for first-time homebuyers. The epidemic has stimulated new demands: some buyers want more office space, while others are willing to stay away from the office. Thanks to irritating inspections, tolerance for student loans, and less travel and entertainment expenses, many workers who will keep working in 2020 will be able to save down payments.
At the same time, supply has never been tight. During the 2007-09 recession, new housing construction dropped sharply and remained low in the following years. Homeowners can also stay longer in the house, partly because the aging baby boomers stay healthy later in life and choose not to downsize. Realtor.com data shows that the number of homes for sale in March was about half of what it was a year ago. In Austin, Texas, Jacksonville, Florida, and Raleigh, North Carolina, inventories fell more than 70% year-on-year. (The Wall Street Journal’s parent company News Corp. runs Realtor.com.)
There is very little competition in the market, especially for first-time homebuyers or those with limited budgets. Bidding battles are common, and the new list will not last long. According to data from the National Association of Realtors, for every three-quarters of houses sold in February, nearly three months are less than one month old.
The price has risen to the highest level ever
The Federal Housing Finance Agency said this week that national single-family housing prices rose 12% in January from the same period last year, the largest annual increase in data dating back to 1991. Prices in all nine regions of the country tracked by FHFA have increased by more than 10% year-on-year.
NAR said that in February, the median price of existing homes increased by 15.8% from a year earlier to US$313,000.
Redfin chief economist Daryl Fairweather (Daryl Fairweather) said that even if housing prices are rising rapidly, many homeowners are still reluctant to sell their homes because they are worried about competing for another home in the same market. Because mortgage interest rates are so low, many families decided to refinance last year instead of moving.
Real estate agents say there may be more inventory in the market this spring, which is usually the busiest season for home sales. However, there are not enough new products to cool the market. According to NAR data, across the country, there was a two-month supply of houses on the market at the end of February, close to the lowest level in history.
Even high-priced cities where sales plummeted last spring showed signs of growth. Brokerage firm Douglas Elliman said that the sales of Manhattan co-ops and condominiums in the first quarter of 2021 exceeded the same period last year for the first time in four quarters. According to data from Redfin, in San Francisco, house sales in February increased by 19% from the same period last year.
Homebuilders are trying to increase buildings to meet the booming demand. In recent years, new construction has rebounded from lows during the recession, but the country is still short of millions of housing units. Last spring, housing construction activity slowed down, while in summer, housing construction activity increased. However, according to builders and economists, the pace of construction is limited by high timber costs, material bottlenecks, and shortages of land and labor. The buying interest is so strong that many builders limit how many houses they can sell at once. They want to make sure that their sales will not exceed their capabilities.
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Economists and executives predict that demand will remain strong this year, and they expect that as the large millennials and Gen Z generations age, population-driven forces will continue for several years. Nonetheless, there have been some recent signs that as more homes are listed, price growth may slow down. Rising mortgage rates-at their highest level since June and have been rising steadily in recent weeks-may cause some buyers to exit the market later this year.
Even buyers who are excited about owning their first house are wiped out by this business. When the epidemic broke out, Samantha and Doug Hawkins were 32 years old. They moved out of their one-bedroom apartment in Boston and moved into the house of Ms. Hawkins’ parents. They saved their savings by not paying rent, and Ms. Hawkins paid off her student loan.
However, when they started looking for a house in the second half of last year, they found it difficult to compete with other bidders. Ms. Hawkins from the human resources department said they were told that sellers would not consider offers with a down payment of less than 20%.
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After increasing their budget and expanding their search, the Hawkins accepted their sixth offer in March for a four-bedroom house in Westford, Massachusetts, which was farther from Boston than it seemed. far. They are in the contract and the transaction is expected to be completed in June.
Ms. Hawkins said: “We are very proud to be able to do this and are excited to take the next step in our lives.” “But to make it a competitive market… just a little bit of joy in the process. That’s it.”