Today’s real estate market might seem untenable for buyers. Since the pandemic began, looking at homes is harder, and competition as fierce as it’s ever been.
Homes seem to all be selling with multiple offers for hundreds of thousands of dollars over the seller’s asking price, and the inventory appears paltry.
Home buyers are facing relentless competition in the housing market, driven by low mortgage rates and inventory. According to the latest REALTORS® Confidence Index, based on real estate transactions nationwide in March, agents report an average of five offers on their most recent listing.
In a separate report by Redfin published in April, 72% of the brokerage’s agents faced competition when submitting an offer for their clients—up from 66.7% in March. [Source California Association of REALTORS]
But is what you are hearing from your colleagues who missed out on several homes, and even the media reports accurate?
A lot of what you may be hearing is true, but sensational stories always pique our interest and that’s what we tend to remember. But there’s more to the story…
Are Homes Selling Fast?
Did you know that there are over 600 homes for sale in San Mateo County as of today, June 2, 2021, and that the average days these homes have been on the market is 51? We’re willing to bet that would surprise most home shoppers today. What’s wrong with these homes? They’re overpriced, and ripe for an under asking offer.
Home sales that are pending may give us a more accurate measure of how long homes that are highly desirable sit on the market, and that answer may also surprise you—22 days.
Now not all of these homes would make the cover of Architectural Digest, but keep an open mind when looking at homes, some are a true diamond in the rough. Remember, if you’re looking for what everyone else wants, you’ll also be competing with everyone else.
What About Low Inventory?
Looking at the sales of homes, we compared the number of new listings in the first quarter of 2020 to the first quarter of 2021 and there were 256 more listings this year than last—an increase of 20% in new listings YOY.
Since sales were also up 20% during the same periods, the excess inventory of new listings was quickly gobbled up, giving the impression that there’s no inventory of homes available for sale.
Notice in the last column, that the months of inventory, which is the time it would take to deplete the inventory of homes given the current rate of sales, reflects that 20% drop with the months of inventory dropping from 1.8 months to 1.5—hardly earth shattering.
The median home price is the number everyone should be watching. In San Mateo County, it’s up 13.5% YOY for the first quarter of 2021. This means the median priced homes which sold last year for $1,600,000, just cost buyers a whopping $250,000 more this year.
If you’re a buyer and you’re frustrated with the competitive home market today, waiting it out could prove to be a fool’s errand. Between possible interest rate hikes, and home value increases, trying to save more money to buy more home may have you sidelined in today’s housing market and chasing the elusive.
There may be some hope as we approach the summer for less competition in the pursuit of Bay Area housing. With Memorial Day past, the unofficial start to summer under way and kids are out of school, it’s time for parents to start taking their children on vacations.
June marks the beginning of the slower months for sales activity. This lasts usually until a week after kids are back in school. Summer provides a good opportunity to get a home with less competition than in spring and before people return from summer trips.
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The information contained in this article is educational and intended for informational purposes only. It does not constitute real estate, tax, insurance or legal advice, nor does it substitute for advice specific to your situation. Always consult an appropriate professional familiar with your scenario.