Competition in the housing market this spring is hotter than ever thanks to high demand and record low supply.
Selling a home has probably never been easier, and while this may sound like good news to real estate agents, there is one problem: they are desperate for listings.
“Honestly, this isn’t the time for amateurs,” said Dana Bull, a Boston real estate agent. “This is the big league here.”
Bull has been in the real estate business for over a decade and has never seen it so lean. It’s not just Boston; According to realtor.com, around half as many properties are currently being offered for sale across the country without a contract as a year ago. The typical house is now also selling a week faster than last year.
In terms of numbers, there are now about twice as many working real estate agents as there are advertisements. Spring is usually the time of year when most listings hit the market, but 20% fewer homes were listed this March than last March.
Potential sellers have several concerns, the largest of which is that they fear that they will not be able to find or afford another home. According to the S&P Case-Shiller House Price Index, not only are house prices incredibly hot, up over 11% year-over-year, but rents are also rising rapidly.
Nationwide, nearly 61% of Redfin agent-posted housing listings faced bidding wars in February, up from 59% in January. This is the 10th straight month that more than half of Redfin ‘offerings have been exposed to competition. More than a third of the homes are now also being sold at a price higher than the list price.
“The rise in mortgage rates is likely to fuel further bidding wars in the short term as house seekers rush to buy houses before interest rates rise any further,” said Redfin chief economist Daryl Fairweather.
Agent Dana Bull prepares for an open house outside of Boston, MA.
Marco Mastrorilli | CNBC
It is an ongoing struggle for agents to find more listings. Supply was narrowest at the lower end of the market, but now the upper end is also shrinking.
“We’re pulling out all the stops on mailers, on social media,” said Bull.
The pandemic has also given her a different path. Due to the new remote working culture, potential customers are no longer restricted by location or route to work.
“So we’re tapping into our network and we’re trying to facilitate some of these transactions, and some of them are happening, in Boston, out of Boston, out of state, across the country. So let’s network and do all we can to work our channels and maintain our connections, “said Bull.
For a mid-range condo in Boston last month, potential buyers lined up outside and complained about the competition inside. Stockbroker Geoff Strobeck said he had never seen anything like it.
Selling is easy, he said, but it is difficult to find more offers. He said he is focused on educating and enticing potential salespeople.
“There is no magic bullet for that,” said Strobeck. “To me it says, ‘Hey, that house in your neighborhood was sold 11 offers, or it sold X amount when I asked, and I think we can do that to your house too.'”
The condominium was sold in barely two days with several offers above the asking price. However, high retail prices only go so far. Potential sellers are still concerned about people being able to tour their homes, especially in areas where Covid numbers are rising again. Agents use virtual tours, even face-to-face virtual tours, but salespeople are still shy.
Rising mortgage rates won’t help either. Most current homeowners have refinanced to experience low interest rates. More than a dozen record lows were hit in the past year. Interest is now higher, which means that whatever you buy next would cost you more in interest payments.
As a result, realtors are becoming more sophisticated and trying to lure sellers with other available properties in their area.
“It feels like a Tetris game,” said Bull. “We look at the entire board, trying to place people and move them strategically to best suit their lifestyle.”