Recent Gains in home prices break record

Home-price gains in 2021 are on pace to smash last year’s all-time high after record-low mortgage rates fueled bidding wars across the U.S., Fannie Mae said in a forecast on Friday.

Home prices probably will surge 17% this year, beating the record gain of 11% set in 2020 that surpassed the prior peak of 10% seen at the height of the real estate boom that petered out in mid-2006, the largest U.S. mortgage securitizer said.

Prices for homes began spiking last year after the Federal Reserve stepped into the bond markets in March 2020 to purchase Treasuries and mortgage-backed securities to support the economy during the pandemic and prevent the type of credit crunch that crashed the U.S. financial system in 2008.

Both type of asset purchases — Treasuries and mortgage bonds — put downward pressure on rates because home-financing costs tend to track long-term Treasury yields. When the Fed became the 800-pound gorilla in the bond markets it boosted competition for the fixed assets, which resulted in investors having to accept smaller yields.

“We believe strong price appreciation is likely to continue in coming months,” Fannie Mae economists said in commentary released on Friday with the forecast. “When compared to this past spring, housing market activity has cooled, as indicated by measures such as the number of homes with multiple bids, average days on the market, and sales prices relative to asking prices. However, these indicators all remain well above the historical norm and point to a continued tight market.”

The U.S. real estate market struggled with low inventory prior to the start of the pandemic because of years of underbuilding after the 2008 financial crisis put hundreds of construction companies out of business.

Following an initial lull in the housing market during the first months of the pandemic, demand for real estate began to accelerate as Americans working from home, and often schooling their children at the kitchen table, became dissatisfied with their existing digs.

The average U.S. rate for a 30-year fixed mortgage dipped below 3% for the first time ever in July 2020, four months after the Fed started buying bonds, and went on to set new records a dozen more times in 2020. The current all-time low is the 2.65% set in the first week of 2021, as measured by a Freddie Mac data series that goes back to 1971.

Lower rates typically mean buyers qualify for bigger mortgages because lenders use a formula that compares the monthly bill of the new loan, with its cheaper financing costs, against income and other debts. That sparked bidding wars for property that drove up home prices.

The rate seen in 2021’s first week is likely to stand in the record books as the bottom, Fannie Mae said. The Fed is set to begin tapering those bond purchases in November of December, according to the minutes of last month’s meeting released last week.

The average 30-year fixed rate next year probably will be 3.3%, compared with 2.9% in 2021, the mortgage giant said.

Next year, home-price appreciation is expected to slow but not fall of a cliff, according to the Fannie Mae forecast. The sale price of U.S. homes probably will gain 7.4% in 2022, Fannie Mae said.

That would beat the 3.3% average annual appreciation seen in the decade before the start of the pandemic, according to data from the Federal Housing Finance Agency.

Kathleen Howley, Forbes

Puget Sound’s ‘frenzied’ real estate market brings ‘slim pickings’

Housing activity in the Puget Sound region remained “very active” last month even as more inventory hit the market, according to a new report from the Northwest Multiple Listing Services (NWMLS).

While a slight cool-down in the market was detected in the late summer with less homes going under contract, the activity has bounced back with the report showing that brokers added a total of 11,373 new listings for single-family homes and condominiums in September. 

However, inventory remains historically low in the competitive market with prices only projected to increase in the next year. NWMLS brokers reported a total of 7,757 active listings in September, slightly up from August’s high of 7,425 active listings but down 14.8% compared to the same time last year. Inventory for single-family homes in King County took a steep plummet in September, with total active listings down 32.5% from a year ago.

Across all 26 Washington counties surveyed in the report, there is only 0.75 months of inventory. The agency noted that it hasn’t seen more than a one month supply in inventory since July 2020, when it reached 1.04 months.”The housing market intensity for each new listing will continue its upward trajectory as the first of the year approaches,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate, in a news release Wednesday.

With slim pickings in inventory and fierce competition, prices have continued to increase. In the past year, the median sales price increased by 14% — or $70,050 — across the 26 counties surveyed by the NWMLS.

And it’s not just King County and the surrounding areas that have experienced steep price increases: “outer suburban” areas along Interstate 5 are also seeing growth, with home prices in Kittitas County jumping by more than 26% compared to a year ago.

The report did note that the market for condominiums — which saw huge declines last year due to the COVID-19 pandemic and less people living in dense, urban areas — has stabilized, with an increase in both sales and prices. In King County, NWMLS showed a 20% jump in the number of condos that went under contract last month compared to a year ago, with median prices rising by 8% to $466,501.

Other nearby counties also saw huge increases in condo prices compared to a year ago: Kitsap jumped by 28.5%, Snohomish was up by 17.8% and Pierce County prices increased by 16.7%. Priced out of buying a single-family home, it is likely that more residential buyers are turning to condominiums, leading to a strong rebound in that market.

“We continue to see a migration of buyers to suburban markets which has resulted in significant year-over-year price growth in areas such as Shoreline, Lake Sammamish, Auburn, Skyway, Woodinville, and Burien,” said Matthew Gardner, chief economist at Windermere Real Estate. “It’s likely that buyers are drawn to these areas because housing is more affordable than in the urban neighborhoods closer to Seattle and Bellevue.”

Experts waned on whether the frenzy-level activity would continue into the winter and holiday season, which is typically slower.

“Buyers should consider staying in the market, if they can, as homeowners who are selling in the last quarter of the year tend to be highly motivated,” said John Deely, executive vice president of operations for Coldwell Banker Bain.

Callie Craighead, SeattlePI

Is Seattle’s real estate market cooling down?

After a chaotic summer that saw extremely low housing inventory, bidding wars and record-breaking jumps in median sale prices, Seattle’s tight real estate market could be showing signs of cooling off for the fall season.

A new market report form the Northwest Multiple Listing Service (NWMLS) found that competition for homes in Seattle eased slightly in July, with brokers adding more listings and less homes going under contract. The agency saw slightly fewer pending sales in July than in June and May.

Some of that slowdown might be seasonal, while other experts took into account that the state lifted all COVID-19 restrictions on June 30, and more people could be traveling after spending so much time at home.

“Although the local market is intense, buyers can find some relief because there aren’t as many offers to compete with compared to earlier this year,” said J. Lennox Scott, chairman and CEO of John L. Scott Real Estate in a news release Thursday. “August historically is the last month of the year with elevated levels of new listings before they slowly taper down in the fall and decline more substantially over the winter.”

However, inventory still remains historically low and prices are still climbing, meaning any breathing room for homebuyers might be short lived. Across all 26 Washington counties surveyed by the NWMLS, there is only 0.73 months of inventory. And only 12 counties report having more than one month of supply.

“Despite the extreme shortage of inventory and robust sales activity, there seems to be a bit of a leveling off from the market frenzy,” said Gary O’Leyar, broker owner at Berkshire Hathaway HomeServices Signature Properties. “In my opinion this is due to a typical mid-summer season market combined with some buyer fatigue.”

Prices also continued to climb. In June, median sale prices for homes in the region soared 30% compared to the previous year, marking a new record high. In King County, the median home sale price hit $775,000 in May, up 23% from the same time last year.

However, that growth is not just in the Seattle metro area. Many brokers said that suburban counties along the Interstate 5 corridor have seen sharp price increases, mirroring the fact that homes in the heart of Seattle are appreciating at a slower rate than homes located away from downtown.

“Prices in Lewis County are up 54.2% from the July 2019 level, Snohomish County is up 40.6%, and Island County is up 44.3%,” said James Young, director of the Washington Center for Real Estate Research at the University of Washington. “The search for value in the suburbs with sharp price increases suggest households are making their housing preferences known. They want to own rather than rent.”

One area of the market continues to rebound from the pandemic: condominium sales. New listings outpaced pending sales in July, and prices rose more modestly at 12.6%. In King County, where the majority of condos are sold, the median priced condo sold for $460,000.

Brokers are advising residents to make the most of the seasonal lull in the market while also warning potential sellers about overpricing.

“My advice to buyers would be to take advantage of this time before Labor Day and the fall market,” said O’Leyar. “[For sellers,] don’t get overly hyped with anecdotal information about the real estate market. Overpricing a listing in this market is still a big mistake.”

~Callie Craighead, Seattle P-I

Housing boom will end when interest rates rise

The current housing boom will flatten in 2022—or possibly early 2023—when mortgage interest rates rise. There is no bubble to burst, though prices may retreat from panic-buying highs.

The boom produced some frantic buying, bids in excess of asking prices, and plenty of worry among would-be homeowners. But this has not been a bubble. A bubble is not simply rising prices, but demand not justified by fundamental economic factors. The key to the buying boom has been low mortgage rates plus a shift in desired housing type.

Mortgage rates hit what was then an all-time low of four percent in 2011, and then remained in that neighborhood until the pandemic, when they hit three percent. The decline in mortgage rates in 2020 dropped the monthly payment on a house by 12 percent, enabling many people to buy houses now rather than later.

In addition to the low mortgage rates, some people saw a future of remote work and wanted more space, which often means moving out of an apartment into a single family house. Others found urban living less fun, so they headed into the suburbs where houses are more common than apartments.

The increased demand for houses drove prices up, quite predictably. Yet the supply could not adjust as fast as demand. Home builders ramped up production in the second half of 2020, but after a few months they ran into supply constraints. Ready-to-build lots were all bought up, labor for construction was hard to find and social distancing made workers less productive. Now rising materials prices and goods on back-order squeeze profit margins. That’s how we find ourselves in the current housing boom.

But this boom is not a bubble, because the rise in prices is easily explained by the fundamentals of cheap mortgages and supply limitations. Recent housing starts are below historical averages, though that is justified by lower population growth. But with the shift from multifamily to single family housing, recent construction levels make sense. There need be no sudden drop in new construction to maintain a reasonable equilibrium.

When will the boom end? The two keys are satisfying the new demand and mortgage rates. Low mortgage rates allowed young families to buy houses earlier than they otherwise would have. It did not change the economics of buying for people who were never going to be homeowners. Instead, low mortgage rates enabled people to achieve their dreams earlier than they otherwise would have. In this sense, the strong housing market of 2020 and 2021 has been borrowing from the future. However, the shift in preferences from urban living to suburban living by people who previously could have bought houses is permanent new demand. At least, so long as they don’t become disillusioned about home ownership.

Mortgage rates are likely to rise when financial markets anticipate more inflation and action by the Federal Reserve to stem inflation. Although the Fed’s traditional tools impact short-term rates, with only small effect on mortgage rates, the new actions by the Fed impact mortgages directly. The Fed has been buying mortgages wholesale, depressing mortgage interest rates. The Fed has also been buying many treasury securities, which are often competitors to mortgages for institutional investors.

Mortgage rates are likely to rise a full percentage point by mid-2022, though this forecast exceeds the average prediction of my fellow economists. They doubt long-term interest rates will rise by a percentage point even out to December 2022. If they are right and I am wrong, then the housing market will remain strong longer.

Business leaders in the housing supply chain should enjoy their strong sales this year but not anticipate further growth in the coming years. Major capital projects must pencil out with sales back at 2019 levels.

Prospective home buyers should probably chill. It’s been a tough buying season. Although prices are unlikely to fall nationwide, there will probably be easier buying opportunities in 2023.

by Bill Conerly, Forbes

Market offers home for homebuyers, but may be temporary

Homebuyers may find some good news in the latest report from Northwest Multiple Listing Service (NWMLS). The number of active listings at the end of June, 6,358, reached the highest level since November when buyers could choose from 6,505 properties. The volume of new listings added last month was the highest number in 17 months (13,111 last month versus 14,689 at the end of November 2019).

“Homebuyers will be happy to hear that between May and June the number of listings in King, Pierce, and Snohomish counties rose, giving them more homes to choose from and possibly easing the pressure just a little,” remarked Matthew Gardner, chief economist at Windermere Real Estate.

For the tri-county area, total active listings of single family homes and condominiums increased 14.5% from May. System-wide, the report covering all 26 counties served by Northwest MLS shows month-to-month inventory improved 14.9%.

“Buyers need some relief, so I hope this trend continues,” said Gardner.

Broker Dean Rebhuhn, owner at Village Homes and Properties, agreed the slight increase in new listings is good news for buyers, but tempered his optimism. “Low inventory and high demand coupled with low interest rates continue to drive up the market.” He also noted Kittitas County “is no exception to brisk sales. Many homes in that county are selling within one or two weeks.”

NWMLS director Frank Leach, broker/owner at RE/MAX Platinum Services in Silverdale, described Kitsap County as another “heated market” but said brokers there are growing inventory very slowly, resulting in more selection for buyers. Brokers added 621 new listings to that county’s inventory, improving on May’s volume by more than 13%. That number also marked the first time since May 2019 that the number of new listings in Kitsap County topped 600.

Other industry analysts suggested the uptick in inventory might be short-lived, citing vigorous activity as Washington state lifts several strict coronavirus restrictions.

“We continue on a trajectory that will keep the Puget Sound region at the top of national lists for one of the hottest housing markets,” stated John Deely, executive vice president of operations for Coldwell Banker Bain. “Inventory on hand remains at two-to-three weeks in the larger counties,” he noted.

The latest report from Northwest MLS shows a year-over-year (YOY) drop in active listings of more than 34%, with only about two weeks (0.58 months) of supply available areawide. Last month marked the first time since July 2020 that the year-over-year decline fell below 40%.

Only 10 of the 26 counties in the MLS report have more than one month of supply. Of these, only one (Ferry) has more than two months of supply. Snohomish County’s inventory declined more than 44% from a year ago, leaving it with only about 10 days of inventory (0.35 months of supply), the lowest of all the counties served by Northwest MLS.

“While pending sales saw a significant drop over this time last year, we believe that rather than that being an indication of a flattening of the market, this is a result of our extreme heat events, a typical summer slowdown as schools let out and people starting vacations, and, this year, the reopening of the country and discontinuation of COVID-19 restrictions,” explained Deely.

Pending sales rose about 3.5% compared with a year ago (from 11,916 to 12,328) but fell slightly from May when mutually accepted offers outgained the number of listings added during the month.

“The local real estate market is virtually sold out in the more affordable and mid-price ranges, even into the luxury market in some areas,” reported J. Lennox Scott, chairman and CEO of John L. Scott Real Estate. “This places extra focus on each new resale listing as it comes onto the market.”

An analysis of last month’s statistics by price range illustrates Scott’s point. Fewer than 23% of June’s listings had asking prices under $400,000. About a third of the inventory was listed at $800,000 or above.

James Young, the director of the Washington Center for Real Estate Research at the University of Washington, said the decline in active listings volume suggests homes are selling and closing very quickly once listed. He noted that while listing levels for June were higher than two years ago, pending and closed sales are much higher. “This indicates that well priced properties are closing very quickly.”

Lennox Scott concurred. “Many homes are going under contract within days due to the intense buyer demand.” He anticipates two more months of “elevated new resale listings” before the selection starts decreasing. “We expect the extremely high intensity for each listing will continue in most price ranges locally into the spring of 2022 due to historically low interest rates creating a large backlog of buyers looking to purchase a home.”

Deely said affordability, especially for first-time homebuyers, continues to be a concern. “Given indications from tech companies like Amazon and Microsoft to lease large office spaces and hire thousands of employees in our region, drawing people from higher-priced markets like Silicon Valley with lots of money to spend, we don’t see much change in this scenario for buyers in the short term.”

Brokers reported 10,923 completed transactions during June, a 31.4% increase from twelve months ago, and up 16.5% from May’s total of 9,374. Prices on last month’s sales, which includes single family homes and condominiums, rose nearly 27% from a year ago, from $465,000 to $589,000.

The single family segment accounted for about 86% of the sales. The median sales price on those 9,417 transactions was $611,000, which was 27% higher than the year-ago figure of $480,950.

Condo sales jumped a whopping 59% from a year ago, with prices increasing more than 20%. For last month’s 1,506 closed sales, the median price was $440,000; a year ago it was $365,000.

Looking at month-to-month, rather than YOY changes, Gardner noted King and Pierce counties experienced only modest price increases, while prices in Snohomish County rose by “a solid 3.1%. I believe this points to an uptick in buyers who can continue working from home and have made the choice to move from King to Snohomish County where housing is more affordable. The same can be inferred for Kitsap County.”

A comparison of Northwest MLS figures shows the median price on last month’s completed transactions in King County was $779,919, while in Snohomish County it was about $105,000 less ($675,000). In Kitsap County, where the median price was $505,000, the difference is nearly $275,000. Pierce County homes that sold last month had a median price of $507,375.

Commenting on the NWMLS report, Dick Beeson, managing broker at RE/MAX Northwest, Tacoma-Gig Harbor, said it reflects a “slight turn of the wheel. Sellers are still in control, but their expectations need a slight readjustment. Instead of 20 offers, there may only be five or fewer. Maybe even only one.”

When that happens, some sellers balk at selling, thinking they are being undersold, according to Beeson. “Sellers must remember, you can’t underprice a home in this market. You can still overprice a property. The market will find you out and drive the price to the appropriate market value.”

Given the strong, competitive market across all price ranges, Beeson offered a recipe for buyer success. “Scour the new inventory coming on the market daily; write the best offer you can using all the offer strategies you’re equipped to employ, and then decide if the extra cost to win the sale is an acceptable value to you. Close the sale quickly, and don’t whimper!”

Rebhuhn also offered hope for buyers who are prepared to act. “Generally speaking, July and August provide more opportunities for buyers as there is less competition because of vacations and fewer relocation buyers in mid-summer.”

Builders are also caught in the frenzy. “Builders are racing to bring new communities online and hoping to hit the sweet spot as prices on building materials for new construction begin to fall,” reported Frank Leach. He said new apartment buildings and condos are being approved and built all across Kitsap County to accommodate newly arriving residents. Notably, Leach said an aircraft carrier due to arrive shortly could potentially add 3,500 people to that county’s rental market.

Although pending sales in Kitsap County dipped slightly from a year ago, they were up nearly 12% from May. “The market in Kitsap County is expected to remain very competitive with exposure of only eight days on the market, on average, across all price ranges,” Leach noted.

NWMLS Press Release, July 7, 2021

Home prices keep rising

The Federal Housing Finance Agency (FHFA) found that house prices across the nation rose 16% from April 2020 to April 2021.

From March to April, house prices rose1.8%, surpassing the previous month’s 1.6% increase.

Three regions — the Pacific coast, the western states and New England — saw more pronounced year over year increases. The FHFA index tracks seasonally-adjusted, purchase data from Fannie Mae and Freddie Mac.

In the mountain division, which includes Colorado, New Mexico, Idaho, Wyoming, Utah, Nevada, Arizona and Wyoming, house prices rose 21% year over year. In the pacific division, encompassing Washington, Oregon and California, prices rose 18%. In Maine, Vermont, New Hampshire, Massachusetts, Connecticut and Rhode Island, house prices also rose 18%.

“House prices recorded another monthly and annual record in April,” said Dr. Lynn Fisher, FHFA’s deputy director of the division of research and statistics. “This unprecedented price growth persists due to strong demand, bolstered by still-low mortgage rates, and too few homes for sale.”

Mortgage rates rose above 3% for the first time in 10 weeks last week. Mortgage applications are still on the rise, however.

House prices have risen during the past year as a result of elevated lumber prices, a lack of available homes and increased demand for homes.

Lockdowns early in the pandemic led many to work from home and divide their living space into home offices. Those who were able to bought homes with more space, better suited to the pandemic remote work trend.

That has led to astonishing price increases in markets like Seattle, where the median home-sale price rose more than 26% year-over-year to a record $737,800 in May 2021. Tech employees there, faced with working remotely from cramped apartments, instead hunted for homes with more space.

“I’ve never seen anything like this housing market,” a Seattle-area Redfin agent said.

~by Georgia Kromrei, HousingWire

5 trends fueling hot real estate market

The housing market is on fire.

What began as a pickup in demand early in the pandemic has evolved into an all-out buying spree. Sales of new and previously owned homes, while off their peaks, remain elevated. Construction has picked up somewhat, but contractors are struggling to shore up supply. With inventory sitting near record lows, price growth has accelerated to rival the 2000s housing bubble.

Reports published Tuesday confirmed the boom is alive and well. Prices soared through March at the fastest rate since 2005, according to S&P CoreLogic. Separately, Census Bureau data showed new single-family home sales slowing 5.9% through April. Still, the sales pace sits well above the pre-pandemic norm.

But it’s not just conventional gauges posting shocking superlatives — fundamental change is afoot in US housing. Alternative data, from lumber prices to the realtor-to-listing ratio, show a handful of structural shifts taking place throughout the market. Glenn Kelman, CEO of real-estate brokerage Redfin, unpacked several of them on a Twitter thread that racked up more than 14,000 likes in less than 48 hours. 

     Here are the five major changes reshaping the US housing sector.

1 – Buyers face a persistent shortage of available homes

At its core, the market boom is simply a result of too few homes. Economists are largely confident that, while trends are similar to the mid-2000s bubble, it’s a nationwide supply shortage driving prices higher, and not risky lending practices.

  • More realtors than listings

The number of available homes in the US totaled 1.16 million at the end of April, according to the National Association of Realtors. NAR ended last month with 1.48 million members.

The association’s membership has exceeded listings through much of the year as sales bite into home availability.

  • Historically low inventory

The national supply of available homes in the US plummeted to record lows at the start of the pandemic and have only just risen from those levels through 2021. The monthly inventory rose to 4.4 months in April, but the bounce has as much to do with a slowing pace of sales as it does with a pickup in construction.

  • Homes selling at a record pace

When homes are coming up for sale, they aren’t staying on the market all that long. The average home now sells in a record-low 17 days, Kelman wrote on Twitter.

2 – People are fleeing cities for cheaper locales

The story of the 2020-2021 housing market is also one of migration. Americans largely fled densely populated cities for suburbs and traded their apartments for homes while mortgage rates were low. And after years of intense crowding in metropolitan areas, people seeking more space during the work-from-home period rushed to less populated states.

  • Low-tax states seeing huge inflows

Attractive tax rates seemingly played a major role in the moving bonanza. Four people moved into low-tax states for every one that left, Kelman said. That ratio rose to 5:1 in Texas and 7:1 in Florida.

  • Moving families face a new status quo

Americans who moved during the pandemic took a few risks. In a Redfin survey of 2,000 homebuyers, 63% said they bid on a home they hadn’t seen in person yet.

Separately, those moving to low-tax states enjoyed far lower housing costs. In many instances, the money saved allowed one parent to stop working, and many buyers are retiring early, Kelman said in a Wednesday tweet.

  • Inventory and prices up in SF and NYC

Still, some of the country’s biggest cities aren’t down for the count. Inventory has swung higher in New York City and San Francisco by 28% and 77%, respectively, according to Kelman. Yet prices are increasing steadily in both markets, suggesting that, while many are moving out, enough are moving in to support already lofty prices.

3 – It’s getting more and more expensive to build homes

The simplest solution to slowing homes’ rapid price growth would be to increase supply. Yet the combination of a historic surge in demand with supply-chain bottlenecks as the economy reopened have hindered contractors.

  • Lumber prices exploded higher

Most recently, surging lumber costs cut into builders’ efforts. Prices soared to record highs earlier in May and closed 280% higher year-over-year on Tuesday.

  • Not enough building space

Even if lumber cost less, there’s scant room to build homes. The New Home Lot Supply Index — which tracks lots ready for building — fell 10% to a record low in the first quarter, according to housing analytics firm Zonda.

Even the firms that have empty lots are running behind in converting them to sellable homes. About 242,000 authorized homes hadn’t been started yet in April, the Census Bureau said last week. That’s the highest level since 1979. 

  • Builders waiting for the opportune moment

The various shortages and bottlenecks have led builders to hit the brakes and wait for profitability to rebound. Nearly one-in-five contractors surveyed by the National Association of Realtors in April said they’re delaying construction or sales.

About 47% said they added escalation clauses to contracts last month. The clauses allow contractors to lift homes’ selling prices to offset an increase in building costs.

4 – Pricey construction, unrelenting demand is driving stronger home inflation

With builders unable to meet demand with new supply, prices predictably shot through the roof. Experts see home-price inflation staying hot into 2023, and with selling prices already elevated, a long rally could further dent home affordability across the US.

  • Prices hit record highs

While the rate of sales has cooled slightly, price growth remains strong. The median selling price of new homes rose to a record-high $372, 400 in April, the Census Bureau said Tuesday.

The median price for previously owned homes rose to a record of its own last month. The average existing home cost $341,000 in April, the National Association of Realtors said on May 21.

  • Sell-over-ask at record highs

For those looking to sell, there’s never been a better time. Homes are selling on average for 1.7% above their asking price, Kelman wrote on Twitter. That’s the largest average overshoot on record.

5 – Americans increasingly prioritize value and space

Still, not all buyers are losing out as the market boom charges onward.

  • Two-thirds of buyers say they snagged great deals

A Redfin survey of 600 homebuyers found that about two-thirds of people who moved during the pandemic bought a unit that was the same size or larger than their previous home. The same share of buyers spent the same or less on housing, the firm added.

  • Most had more cash after they moved

Moving during the pandemic also tended not to break the bank. Of the Americans reporting they moved into larger homes, 78% said they have the same amount of disposable income or more after their move, Kelman said.

“Idaho home price could triple and still seem affordable to a Californian,” the Redfin CEO said in a tweet.

~Ben Winck, Insider 

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

Home prices at all-time high

Home prices are sky-high, and a recent report from Redfin underlines that point with some staggering data.

Median home-sale prices increased 17% year-over-year to $335,613 – a record high, per data taken from more than 400 metro areas during the four-week period ending March 28, 2021. And asking prices of newly listed homes rose 14% year-over-year to $353,500, another all-time high.

Pending home sales were up 38% from the same period in 2020 — and up 28% from the same period 2019 — but pending sales grew just 0.9% from Redfin’s previous four-week report.

Sales in general are still high, per Redfin Chief Economist Daryl Fairweather — 59% of homes that went under contract in the current four-week period had an accepted offer within the first two weeks on the market — but the recent low numbers suggest some homebuyers have reached their limit on high home prices and bidding wars.

“Add to the mix a dwindling number of homes for sale and rising mortgage rates, and the typical family that is still searching for an affordable house may have missed the boat,” Fairweather said. “First-time homebuyers who were already stretching their budgets will have to make bigger compromises on size and location or resign to renting for another year.”

Active listings fell 42% according to the report, spurring would-be buyers to submit offers that are significantly over asking price and making the market difficult to navigate for first-time homebuyers and other price-conscious buyers. Redfin reported that 47% of homes that went under contract in the current four-week period had an accepted offer within one week of hitting the market – yet another all-time high. And 41% of homes sold for more than their listed home price, which was 16 percentage points higher year-over-year.

Fairweather’s suggestion for those would-be buyers: look at condominiums and other more realistic purchases, build some equity, and wait this out.

“[President Joseph Biden’s] infrastructure plan aims to incentivize zoning for multifamily homes, which could increase the supply of affordable homes and provide even more people a path to homeownership,” Fairweather said. “But, there is no guarantee the incentives would be enough for local governments to change their zoning practices.”

The aforementioned infrastructure plan, dubbed the American Jobs Plan, aims to inject $213 billion into housing with the building of 500,000 homes in low- and middle-income areas. And two million affordable homes and commercial buildings would be built and renovated over the next decade as part of the initiative.

~Tim Gaze, HousingWire

All-time record for home sale prices

The median home sale price increased 16% year-over-year to $331,590 – an all-time high, per a report this week from Redfin. But that’s not stopping buyers from snatching up homes days after they’re listed.

During a four-week period ending March 21 and covering 400 metros, 58% of homes that went under contract had an accepted offer within the first two weeks on the market. And between March 14 and March 21, 61% of homes sold in that timeframe had been on the market two weeks or less, and 48% had sold in one week or less.

And offers are coming in well-above asking price, too. Nearly 40% of homes sold above their list price – another all-time high – and 15 percentage points higher year-over-year. The average sale-to-list price ratio, which measures how close homes are selling to their asking prices, increased to 100.2%.

This is concerning for experts, though, many of whom believe home prices will remain high even after mortgage rates, inventory, and building material costs recover to pre-pandemic levels. Rates are already above 3% – after falling into the 2% range during the majority of 2020 – but construction companies are still struggling to keep up with insane lumber prices, stifling new builds.

National Association of Home Builders Chairman Chuck Fowke recently noted that supply shortages and high demand have caused lumber prices to jump “about 200%” since April 2020, and the elevated price of lumber is adding approximately $24,000 to the price of a new home.

When the pandemic is over, purchasing a home is going to cost much more than ever before, putting homeownership much further out of reach for many Americans,” said Daryl Fairweather, Redfin chief economist. “That means a future in which most Americans will not have the opportunity to build wealth through home equity, which will worsen inequality in our society.”

Fairweather noted that President Joseph Biden’s hopeful $3 trillion infrastructure plan includes building 1.5 million sustainable homes, but there is no guarantee the bill will be “passed with every policy proposal intact.”

“America needs an audacious goal to increase the housing supply, given the U.S. is short 2.5 million homes,” she said. “It may be expensive to build millions of homes, but ignoring the problem would only cause housing to become more unaffordable and worsen housing insecurity.”

The best chance at home prices lowering is the continued rollout of the COVID-19 vaccine, experts said, which will allow lumber mills to reopen and material prices to lower. Builders will then be spending less on new builds, which will help the backlogging of inventory.

~ Housing Wire