A sold sign sits in front of a house in Brighton, New York, on Friday, May 22, 2020. (AP Photo/Ted Shaffrey)
July 17, 2020
"It's not good news."
By this point, I was numb to those words as my real estate agent told us we lost out on the seventh home we put an offer on. After seeing more than 50 houses over the course of a month and putting offers on several, we still weren't coming out ahead.
Our search experience has been emotionally challenging but is not anywhere near unique. Homebuyers are facing an intensely competitive market, according to the National Association of Realtors.
"It's a very strong housing market. Some would even say hot," explained Gay Cororaton, research economist for the National Association of Realtors. "The recovery has been spectacular."
Cororaton and her colleagues have analyzed the data on home sales and the home market for the last few months and found some interesting trends.
Houses are hitting the market and selling for about 7 percent more than they did a year ago and pending sales are up 16 percent. At the same time, new listings are down 5 percent compared to July 2019. Nationally, homes are selling within 30 days on average, leaving less time to act on homes when they go on the market.
The coronavirus pandemic has limited the number of people listing their homes, though those numbers have recovered as economies started reopening. Cororaton also pointed to one financial reality that is pushing a more extreme housing market.
Record-low mortgage interest rates have pushed more prospective buyers into the market.
"On a median price home of about $280,000, [the monthly mortgage is] $1000 and that's also the median rent that's out there now," Cororaton explained. "Buying a home has just really become very affordable compared to renting."
The National Association of Realtors saw listings in March and April down more than 30 percent compared to the previous year. Buyers in the market before the pandemic limited housing options remained in the market, pushing up demand, without the supply to support it.
"We've never had anything like this before that's actually changed the landscape of real estate as much and as dramatically as this has," Irma Jalifi, a principal agent for Redfin told Cheddar.
That dramatic market is one Jalifi helps clients navigate: both buyers and sellers. But buyers face unique challenges when searching for houses. She encourages prospective buyers to educate themselves about the market before starting the search.
"They already know that it's super competitive," Jalifi said of educated buyers. "We see these houses come on the market and then they go pending."
According to data from Redfin, more than half of their listings across the country had multiple offers. Those houses are not just seeing a lot of interest; they are also flying off the market.
We toured one home that had been on the market for 12 hours. As we walked through it, I got an alert on my phone: the house was pending.
So what can buyers do to be more competitive? Jalifi outlined how her buyers are closing deals and it might not surprise people to know that an old adage is true.
"Cash always, always, always is always going to be king. That almost always wins out," Jalifi advised.
But for buyers who do not have a pile of money? It's all about the specifics of the offer.
"If someone is willing to waive the appraisal or the difference between list price and the purchase price, waive that, then that could potentially win, even if they're not cash," Jalifi explained.
"I'm seeing a lot of contingencies waived," Jalifi said, though she clarified that inspections are not waived in her experience as often as others. "Other standard stuff is like a higher amount for your earnest money," she said.
For clients in coronavirus hotspots, like Jalifi's clients in Houston, the spreading virus has not slowed the housing market though it did have an impact at the beginning of the pandemic.
"When it first hit in March and April, we were all scrambling trying to keep deals together," Jalifi recalled, "figuring out this new way of doing business from inspectors and appraisers coming into homes to agents going to closings and not being allowed."
But as things have reopened, even in a state like Texas where cases are surging, demand has grown and agents have adapted to a new way of doing business.
"For everything that's going on in the world, we're busy. My numbers are just as good as last year," Jalifi said. "You wouldn't know there's a pandemic."
Real estate agents expect to see continued demand as interest rates will likely remain low but getting the virus under control could stabilize the housing market for buyers. There is other good news on the horizon for home buyers: new home construction is up.
"There was a reduction in home starts," Cororaton, the economist, explained about the impact on new home building during the pandemic. "For May, we're already starting to see some uptick in building starts. So, on the supply side, we're going to see more supply coming in."
But some buyers cannot wait for the market to change.
Jalifi, the principal real estate agent for Redfin in Houston, has had three buyers abandon the search because it's simply too much right now. "Just in the last, probably 10 days, I've gotten a call from three different buyers who were super active, either writing offers or touring," Jalifi said. They've told her, "'hey, Irma, we just can't do it anymore. We've run out of time. We're going to, we signed a lease. We're going to have to wait for another year.'"
Despite those experiences, there are still plenty of buyers who stay in the market until they find something. "Other people are willing to take it on. And they're like, yeah, I'm going to play. I'm going to try," Jalifi said.
It's hard for buyers in a competitive market not to feel defeated. That is something we experienced as offer after offer was rejected.
Still, we stayed in the market until the very end. As pressure mounted on us to find a home with the looming deadline of our lease ending, we submitted yet another offer, our eighth. Eight must be our lucky number because our offer was accepted. We hope to move into our new home in August.