Navigating a housing market that's gotten so competitive, it's "nuts"
Competition in the U.S. housing market is fierce this spring buying-and-selling season, with surging demand and record-low inventory of homes for sale. For homeowners who have been considering selling their properties, the time could be ripe to jump into the market.
"The inventory levels are so low that we are seeing houses sell as quickly as in 20 days on average. So that's nuts," CBS News business analyst Jill Schlesinger told CBSN, referring to February data from the National Association of Realtors. In the same month last year, properties stayed on the market for an average of 36 days.
As for inventory, the number of homes on the market is down almost 50% year-over-year, while 36% of homes sold above list price, according to real estate brokerage Redfin.
"So what the thought process has been among realtors is that, last year, we didn't see a lot of people list their homes, especially those baby boomers who normally might be downsizing or moving to different areas, because they were worried about the virus. Of course you didn't want people traipsing through your home," Schlesinger said.
"But now we see that inventory levels plunging because of all the activity, as a lot of would-be millennials and younger Gen Xers get into the market, gobble up what's on the market — and really, the levels have pushed prices up all over the place except for those cities that were seeing previous booms like the New York metropolitan area, the [San Francisco] Bay area," Schlesinger said.
Historically low mortgage rates amid the COVID-19 pandemic were also "a piece of the puzzle," she noted, but "this was about almost a panic that took over last year because people realized, 'Wait a second, I can work from home.' … Or 'I need more space. My kids are learning at home,' and they look to expand."
For hopeful buyers, in addition to doing the research, Schlesinger urged: "Run your numbers."
"I don't mean just how much is the cost of the mortgage? It's the principal and the interest. It's the homeowner's insurance. It's the property taxes. It's also the maintenance of a house," Schlesinger said.
"Even if you're buying a new house, I know we sort of think of like 'this old house,' but 'this new house' can have problems," she explained. "One to 3% of the purchase price, every year you're going to spend on maintaining that house. So you've got those numbers in hand, and then you've got to be patient."