No end in sight for increasing home prices
Somehow we all thought home prices would calm down as we head into the fall and winter months. We were wrong, as we are hit with not-so-subtle increases.
According to Redfin’s Tim Ellis, housing market takeaways for 434 U.S. metro areas during the 4-week period ending September 20 reveal a 14% increase from 2019 to $319,978—the highest on record, also the largest since August 2013. In just the 4 weeks, prices have increased by 6.6%, compared to that same period in 2018 and 2019, when prices declined an average of 3.7%.
Year over year, pending home sales climbed 29% year, while active listings (the number of homes listed for sale at any point during the period) fell 28% from 2019 to a new all-time low. “The rate of year-over-year supply declines has remained consistent at this level for the past couple of months,” says Ellis. To boot, buyers are making it easy for sellers to let go, with 45.7% of homes that went under contract getting an offer accepted within the first two weeks on the market — a figure that has held relatively steady for the last 16 weeks. This is partially the result of very small margins between asking and selling price; the average sale-to-list price ratio, which measures how close homes are selling to their asking prices, rose to 99.4%—an all-time high and 1.2 percentage points higher than a year earlier.
Ellis cites Redfin chief Daryl Fairweather, saying, “The recent boost in the number of people listing their homes for sale still falls far short of demand from folks looking to buy homes right now. Unfortunately, that means little relief for homebuyers, especially those seeking an affordable home. I don’t expect the double-digit home-price increases to subside before early 2021.”
According to Ellis, real estate experts agree that pricing a home conservatively in a market like this is the ticket, reaping multiple offers that oftentimes come in over asking price. Unrealistic asking prices by comparison, tend to make a house sit on the market for a while, lacking the same multiple offer activity.
Source: Redfin, CoreLogic, TBWS
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