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Homes are still selling like it's summer across much of the US
IT is the end of October, but the US housing market is acting like it is June.
Spurred on by historically low mortgage rates, buyers are racing to snap up homes, defying seasonal norms, even as Covid-19 infections surge in some states. Average listing times are down, and prices in a handful of metropolitan areas are up more than 20 per cent from last year.
"Normally, buyers get a seasonal break," said Danielle Hale, Realtor.com's chief economist. This year, "we're just not seeing that."
The boom is the latest twist in a year that has been anything but normal. After the pandemic severely curtailed home sales in March and April, deals came roaring back, especially in suburbs and more-affordable cities. With few properties on the market, demand is far outstripping supply and leading to bidding wars.
The typical US home went under contract in 16 days in September, showed research from Zillow. That is faster than the pace in June 2018 and 2019, the month when listings moved quickest in those years. In some affordable Midwestern markets, such as Kansas City and Cincinnati, houses sold in five days or fewer on average last month.
Meanwhile, prices soared more than 20 per cent in the Kansas City, Philadelphia and Memphis, Tennessee, metro areas last month, showed data from Redfin Corp. Fairfield County, Connecticut, which includes tony Greenwich, saw a 33 per cent gain.
While homes that are less expensive are selling the quickest, they are moving briskly across all price points. With mortgage rates dropping to record lows nearly a dozen times this year, buyers are trading up into larger properties so they can more comfortably accommodate remote work and school. Younger renters are also making the move to homeownership.
Hannah Schigel, a 24-year-old nurse in Cincinnati, is one of them. In late September, she found a listing for a two-bedroom ranch house that she liked in the city's Oakley neighbourhood. By the time she was able to tour it the following afternoon, there were already a few offers. She scrambled to put in her own that day, and it was accepted at US$196,000.
Because of low mortgage rates, her costs will be about US$1,070 a month, compared with the US$1,008 she was paying to rent. The house was move-in ready, she said, with hardwood floors, new cabinets and a fenced-in backyard where her French bulldog can run around.
Other buyers are looking for more room, now that they are working from home indefinitely.
Katie Watson, 25, is a project coordinator for a biopharmaceutical testing facility in a suburb of Kansas City, Missouri. When her job went remote this year because of the virus, she had an extra incentive to buy. She closed last week on a three-bedroom home in Blue Springs, Missouri, for US$200,000.
As a first-time buyer in a market that has not historically been that competitive, Ms Watson was surprised that she had to put in an offer in less than a day and bid US$15,000 above the listing price.
The rapid-fire bidding is taking place against the backdrop of extremely tight inventory. While listings pile up in expensive urban areas like Manhattan and San Francisco, the reverse is true for suburban areas outside big cities and in much of the rest of the nation.
Across the United States, the number of available homes was down 38 per cent from a year earlier in the week ended Oct 17, said Realtor.com. In Boise, Idaho, which had been booming even before the pandemic, inventory was down 71 per cent.
Tracy Kasper, a longtime real estate agent in the area, said there has been a flood of demand from people relocating to Boise and telecommuting. Buyers are waiving contingencies that allow them to get out of a contract if a house is appraised for less than their offer price or if inspections uncover the need for repairs.
A market that is balanced between buyers and sellers would have about six months of supply, said Ms Kasper. "For the last six months or so, we've had two weeks," she said. "It's just been gangbusters."
Whether the boom continues through the colder months - when buyers tend to get distracted by the holidays - remains to be seen, said Chris Glynn, a senior economist at Zillow. However, he added, the inventory crunch is real. BLOOMBERG