Competition in the real estate market this spring is hotter than ever thanks to high demand and record supply.
Selling a home has probably never been easier, and while this may be good news for real estate agents, there is one problem: they are desperate to find deals.
“Honestly, this is not the time for amateurs,” said Dana Bull, a Boston area real estate agent. “These are the big leagues here.”
Bull has been in the real estate business for over a decade and has never seen it this lean. It’s not just Boston; According to realtor.com, there are currently around half as many homes for sale nationwide as there were a year ago. The typical house is now also selling a week faster than last year.
According to the numbers, there are now roughly twice as many real estate agents as listings. Spring is usually the time of year when most listings hit the market, but 20% fewer homes were listed this March than last March.
Potential sellers have several concerns, the largest of which is their fear of not being able to find or afford another home. According to the S&P Case-Shiller Property Price Index, not only are property prices incredibly high, rising over 11% year over year, but rents are also rising rapidly.
Nationwide, nearly 61% of Redfin agent house listings were exposed to bidding wars in February, up from 59% in January. This is the 10th consecutive month that more than half of Redfin ‘offers have been exposed to competition. More than a third of the houses are now also selling for the above list price.
“The rise in mortgage rates is likely to lead to more bidding wars in the short term as home hunters quickly buy homes before rates rise any further,” said Daryl Fairweather, Redfin chief economist.
Agent Dana Bull prepares for an open house outside of Boston, MA.
Marco Mastrorilli | CNBC
It is an ongoing struggle for agents to find more entries. Supply was narrowest at the lower end of the market, but now the upper end is also decreasing.
“We’re doing everything we can when it comes to mailers and social media access,” said Bull.
The pandemic has also given her a different path. Due to the new remote working culture, potential customers are no longer tied to location or commuting.
“So we’re going into our network and we’re trying to make some of these transactions easy, and some of them are happening, going to Boston, outside of Boston, out of state, across the country. So we network and do all we can. ” We are working on our channels and our connections, “said Bull.
In a mid-price condo in Boston, potential buyers stood outside lamenting the competition inside last month. Listing agent Geoff Strobeck said he had never seen anything like it.
Selling is easy, he said, but finding more offers is difficult. He said his focus is on training and attracting potential sellers.
“There is no magic bullet for it,” said Strobeck. “To me it’s, ‘Hey, that house in your neighborhood was sold 11 offers, or it sold X amount on demand, and I think we can do that to your house too.'”
The condominium was sold in just under two days with several offers above the price. However, high retail prices only go so far. Potential sellers are still concerned about people being able to tour their homes, especially in areas where Covids are rising again. Agents use virtual tours, even face-to-face virtual tours, but salespeople are still skittish.
Rising mortgage rates won’t help either. Most current homeowners have refinanced to experience low interest rates. More than a dozen record lows were hit in the past year. Now the interest rates are higher, which means that whatever they bought next would cost them more in interest payments.
Hence, the agents are getting smarter and trying to lure sellers with other available properties in their areas.
“It feels like a game of Tetris,” Bull said, “where we’re looking at the entire board, trying to place people and strategically move people to best suit their lifestyle.”