Buyers snapping up homes in 5 days or less

Nationwide, almost half of homes sold above list price. These and several other record-breaking measures made April a historic month for housing.

Note: Pandemic lockdowns significantly slowed home buying and selling in April 2020, which means the year-over-year trends for home prices, pending sales, closed sales and new listings are somewhat exaggerated. 

April was another history-making month for housing, with homes selling for higher prices and in fewer days since at least 2012. The following measures all hit new records:

• The national median home-sale price hit a record high of $370,528, up 22% from 2020.
• The number of homes for sale fell to a record low.
• The typical home sold in just 19 days, a record low.
• 49% of homes sold above their list price, a record high.
• The average sale-to-list ratio, a measure of how close homes are selling to their asking prices, hit a record high of 101.6%.

“To put the scarcity of housing into context, there is plenty of room for supply to increase and demand to taper off, and we would still find ourselves in a historically strong seller’s market,” said Redfin Chief Economist Daryl Fairweather. 

“While Americans brace themselves for a lot of changes as workplaces and schools reopen, the story of the housing market will largely remain the same. There simply aren’t enough homes for sale in America for everyone with the desire and the means to buy one right now. Until new construction takes off–over the course of years, not months–home prices will continue to increase. This housing boom is nowhere close to over.”

Indianapolis is home to the country’s fastest housing market. The typical home in the Indianapolis metro went under contract after just four days on the market in April, down from 10 days a year earlier.

“I’m helping buyers understand the current market by advising them that it’s no longer unusual for a home to sell for up to $50,000 above asking price,” said Indianapolis Redfin agent Andrea Ratcliff. “Builders have waiting lists of at least a year and people are hesitant to sell their homes because there are so few options available for them to buy. Plus, remote workers are moving into the Indianapolis area, fueling even more homebuyer demand. Those factors are exacerbating our local housing shortage and fueling the competitive cycle.”

Homes in Seattle also sold exceptionally fast in April, with half of all homes pending sale in just 5 days in each of those metros.

Three of the five most competitive markets of the month were in California. In Oakland, 81.5% of homes sold above list price, a higher share than any other metro. It’s followed by San Jose (78.2%), Tacoma, WA (73.7%), Austin (73.7%) and Sacramento (72.5%).

~Tim Ellis, Redfin

Millennials driving up spring home prices

As consumer confidence rebounds and the job market picks back up, the 2021 spring home buying season is on track to outpace trends seen in 2019 and 2018.

A new report by CoreLogic, a property data and analytics provider, finds that Millennials lead the home buying charge with older Millennials seeking move-up purchases and younger Millennials entering peak home buying years.

“Despite the severe slowdown last year, the 2021 spring home buying season is trending strong — reflecting the many positive signs of economic recovery,” said Frank Martell, president and CEO of CoreLogic. “With prospective buyers continuing to be motivated by historically low mortgage rates, we anticipate sustained demand in the summer and early fall.”

Nationally, CoreLogic reports that home prices increased 11.3% in March 2021, compared with March 2020. On a month-over-month basis, home prices increased by 2% compared to February 2021.

In March, home prices rose sharply in the West with seven of the 10 metros ranked with the highest year-over-year increase. Boise, Idaho, ranked at the top with a year-over-year increase of 27.7%.

Similarly, at the state level, two Mountain-West states — Idaho and Montana — had the strongest price growth in March, up 25% and 18.8% respectively, as they continue to see an uptick in inbound migration from buyers moving away from more costly coastal areas. Arizona had the third-strongest price growth with an 18% increase.

Home prices are projected to increase 3.5% by March 2022 as intensifying affordability challenges narrow the pool of potential buyers and are likely to drive a slowdown in home price growth.

“Lower-priced homes are in big demand and short supply, driving up prices faster compared to their more expensive counterparts,” said Frank Nothaft, chief economist at CoreLogic. “First-time buyers seeking a starter home priced 25% or more below the local area median saw prices jump 15.1% during the past year, compared with the overall 11.3% gain in our national index.”

Compared with 2020, asking prices reached an all-time high of $357,200 during the four-week period ending April 25, according to Redfin, a technology-powered real estate brokerage. Homes that sold during the period were on the market for a median of 20 days, down 16 days from the same period in 2020 and the shortest time on market since at least 2012. The average home sold for 1.2% more than its asking price. 

Fifty-eight percent of homes that went under contract had an accepted offer within the first two weeks on the market. This was a new all-time high since at least 2012. Forty-six percent of homes that went under contract had an accepted offer within one week of hitting the market, an all-time high. 

Lawrence Yun, the National Association of Realtors’ chief economist, points out that the increase in pending sales transactions for March is indicative of high housing demand. “With mortgage rates still very close to record lows and a solid job recovery underway, demand will likely remain high,” he said.

Yun added, “Low inventory has been a consistent problem, but more inventory will show up as new home construction intensifies in the coming months, as well as from a steady wind-down of the mortgage forbearance program. Although these moves won’t immediately replenish low supply, they will be a step forward.”

Mortgage rates are expected to modestly climb higher over the next two years, to 3.2% in 2021 and 3.5% in 2022, as inflation rises due to a stronger economy and higher fiscal spending.

by Brenda Richardson, Forbes