March had Fastest Home Sales This Decade
It’s one of the hottest spring selling seasons ever. Home sales surged in March despite a big drop in inventory, and could even be the fastest housing market on record.
Home buyers can’t be wall flowers this spring, at least not in hot sellers markets like the San Francisco Bay Area, where bidding wars are common.
Competition has been fierce in San Jose, San Francisco, and Oakland. Between about 66% and 70% of all homes sold “above” their listing prices.
And the Bay Area isn’t even the hottest market today.
According to Redfin, Denver tied with Seattle as the two cities with the fastest home sales. In March, the typical home in these two areas went under contract in just eight days.
The real estate website says homes were selling at about the same pace in Seattle last year. But, in Denver, they are going under contract 21 days faster than a year ago.
Across the nation, sales were up almost 9% from last March. Prices were up another 7.5% to a national median of $273,000. And for the entire U.S. real estate market, homes were going under tract in 49 days. That’s the fastest selling season since it began tracking this data in 2010.
A Redfin real estate agent in Los Angeles says it’s not just the competition that’s putting sales on a fast track. Alec Traub says: “Today’s open and immediate access to home listing information is really driving the velocity of home sales.” He says: “In the past, buyers had to wait for their agent to tell them which homes were for sales. Now, when I meet a client for the first time, they already have a home in mind and I can jump in to guide them on what it will take to win it.”
And that’s the trick right now. Arm yourself with knowledge about your market. Get prepared with whatever financing you’ll need. And, be realistic about the price.
Agent Tiffany Aquino from Woodbridge, Virginia, says: “As a seller’s agent, the first thing I do when I receive an offer is ask who the lender is.” She says: “The best offer come from buyers who are pre-approved by a local lender with a strong reputation for speed and reliability.” Sellers want to know that the lender will fund the loan and the deal will close on time.
Agent, Kathy Miller, from Seattle, Washington, says too many buyers miss out on their first choice because they don’t understand the pricing of homes in a strong market. She says: “If you’ve been pre-approved up to $450,000, you should be shopping for homes listed at or below $400,000 so you have room to escalate in a bidding war.”
ReMax is also reporting a scorching hot buying season. It’s National Housing Report shows home sales are 6.6% higher than last year and inventory has dropped below the three-month level. That’s a seller’s market. A 6-month supply is considered a healthy balance between supply and demand.
ReMax also shows a big drop in inventory. It says that U.S. inventory is down 17% compared to last year, and the median sales price is “up” 11%, to $225,000. That’s about $48,000 lower than Redfin’s median.
It claims the average days on the market as 64. That’s down 4 days from February, and 7 days from March of last year.
The numbers may be slightly different between Redfin and ReMax but the end result is about the same – that homes are going fast, and buyers are scrambling to close their deals.
But it’s important to not get caught up in the hype. Remember, markets don’t climb upwards forever. It’s statistically impossible, especially when prices are increasing much faster than salaries. Lenders aren’t adjusting their processes to to make up for the difference, like they did in the mid-2000’s. Stated income loans are a thing of the past.
This means, we will hit a ceiling eventually. Additionally, more inventory will come on the market.
As prices hit their peak, you’ll see more sellers cash in and get out of town. The second largest generation today – the Baby Boomers -are turning 65 at a clip of 10,000 per day.
Also, builders are getting up and running. It takes years to get permits to build, but this year and next will be the timeframe that more inventory comes on line.
You’ve got to be aware of market cycles or you could end up paying more than a property is worth – believing values will continue to climb – only to find out the opposite is true. No one wants to buy at the peak and watch values decline over the next decade.