If you’re in the market for a single-family home, chances are you’ll have competition this summer. Searches for single-family homes have surged as many more people clamor after the privacy of a home with a yard in the midst of this pandemic. A Redfin report says interest in single-family homes hit a four-year high last month. Tampa is at the top of the list for an increase in single-family web searches, probably due to things like Florida’s great weather, low home prices, low taxes, and a friendly business environment.
The real estate company’s report says that 36% of the searches that people saved were filtered to include only single-family homes. That’s up from 33% in February when the pandemic first hit, and it’s up from 28% in May of last year. (1)
Demand for Condos Is Down
Redfin economist, Taylor Marr, says, “One of the biggest benefits of living in a condo or an apartment is sharing the cost of rooftops, pools and gyms, but many of these communal amenities have been roped off due to the pandemic.” He says, “People who were previously willing to share space with strangers in exchange for a nice view and a quick commute now want their own yards and home offices.” And of course, many people are realizing their work-from-home dream because of the outbreak.
The percent of saved searches for single-family homes in the Tampa area rose to 44% during the month of May. That’s up about 10 percentage points from February. Las Vegas, Boston, Seattle, and San Jose were right behind Tampa with about a 6% increase from February. The national uptick is only about 2.8%. Tampa is interesting because it’s attractive for both homebuyers and investors looking to buy single-family rentals. Atlanta was also above the national average for a higher-than-average interest in single-family homes, and it’s also a great city for investors.
Homebuyers Are Our Shopping
The report on single-family home sales, and another report on home buying demand in general show that the housing market took off like a shot at the beginning of June. (2) Redfin says that during the first week of June, demand was 25% higher than it was before the pandemic. It says homes are “flying off the shelves” right now.
Inventory is still a problem, but the report says that sellers were more active last week with more homes entering the market. Sellers have been reluctant to put their homes on the market for fear of bringing COVID-19 into their homes, when potential buyers come to visit. So there’s still an offset with more buyers willing to tour than sellers willing to open their doors, especially if they still live in the home.
Inventory Is Slowly Improving
New listings are down 15% from last year, but the numbers are slowly improving. In mid-May listings were down 11% year-over-year, but they were only down 9% at the beginning of June. The tight supply of homes is creating somewhat of a buyer frenzy as people emerge from their quarantines.
A real estate agent in Maryland said in the report, “It’s just bananas, with so few listings and so many buyers.” She says that buyers are desperate, and will overpay if a property is located in a desirable neighborhood. She says the deal often includes bidding wars, inspection waivers, and a sales price that’s higher than the appraisal.
If the home is priced to market value, they are gone in just days. Many sellers are accepting offers within 14 days of listing. Asking prices are now up 9.9% year-over-year compared to 7.9% at the end of May, and 3.9% in January and February. Sales prices are also higher than that by an average of 3.1%.
Suburban Migration Begins
Redfin says there’s now proof that buyers want to relocate from bigger cities to the suburbs or smaller more affordable cities. One real estate agent said in the report, “That big migration we’re all expecting, it’s beginning to happen. People are now moving more to the interior of the country. I also have a lot of clients who are retiring and moving down south to more tax-favorable states.”
There are still a lot of unknowns about what will happen in the next few months. Some homeowners and renters may relocate, with an eye toward single-family homes in outlying areas. Some renters may become homebuyers although with unemployment numbers as high as they are, many won’t be able to buy a home and will be forced to rent.
If you would like to learn how to buy single-family homes to meet this high demand for rentals, visit our website at www.RealWealth.com. It’s free to sign up and free to access our research and educational materials. Plus, you will get access to the top metros for both cash flow and the potential for appreciation. You’ll also find a list of property managers and rental property providers recommended by RealWealth’s network of over 50,000 members.
(1) Redfin Article 1
(2) Redfin Article 2