Competition in this spring’s housing market is hotter than ever, thanks to high demand and record low supply.
Selling a home has likely never been easier, and while that may sound like great news for real estate agents, there is a problem: They are desperate to find listings.
“Frankly, this is not the time for amateurs,” said Dana Bull, a Boston area real estate agent. “This is the big leagues here.”
Bull has been in the real estate business for over a decade and has never seen it so lean. It’s not just Boston; nationally there are about half as many homes listed for sale right now without contracts on them as there were a year ago, according to realtor.com. The typical home is also now selling a week faster than last year.
By the numbers, there are now about twice as many working real estate agents as there are listings. Spring is usually the time of year when the most listings come on the market, but this March there were 20% fewer homes listed than last March.
Potential sellers have several concerns, the largest being that they are afraid they won’t be able to find or afford another home. Not only are home prices incredibly hot, up over 11% year over year, according to the S&P Case-Shiller home price index, but rents are also rising fast.
Nationwide, nearly 61% of home offers written by Redfin agents faced bidding wars in February, up from 59% in January. That is the 10th-straight month in which more than half of Redfin offers faced competition. More than a third of homes are also now selling for above list price.
“The uptick in mortgage rates is likely fueling more bidding wars in the short term because house hunters are rushing to buy homes before rates rise even further,” said Redfin chief economist Daryl Fairweather.
For agents, finding more listings is a constant struggle. Supply had been tightest on the low end of the market, but now the higher end is slimming as well.
“We’re pulling out all the stops in terms of mailers, in terms of getting on social media,” said Bull.
The pandemic has also offered her another avenue. Potential clients are no longer constrained by location or commute, due to the new remote work culture.
“So, we are tapping our network, trying to facilitate some of these transactions, and some of them are happening, going into Boston, out of Boston, out of state, across the country. So we are networking and doing everything we can, working our channels and working our connections,” said Bull.
At a mid-priced condominium in Boston last month, potential buyers were lining up outside and lamenting the competition inside. The listing agent, Geoff Strobeck, said he’s never seen anything like it.
Selling is easy, he said, but finding more listings is tough. He said he focuses on both educating and enticing potential sellers.
“There’s not a magic bullet for it,” said Strobeck. “For me it’s, ‘Hey this house in your neighborhood sold with 11 offers on it, or it sold X amount over asking, and I think we can do that with your house too.'”
The condominium sold in barely two days with multiple offers over asking price. High sale prices, however, only go so far. Potential sellers are still worried about allowing people to tour their homes, especially in areas where covid19 numbers are rising again. Agents are using virtual tours, even personal virtual walk-throughs, but sellers are still skittish.
Rising mortgage rates also don’t help. Most current homeowners have refinanced to record low rates. More than a dozen record lows were set last year. Now rates are higher, meaning whatever they bought next would cost them more in interest payments.
So agents continue to get more crafty, trying to persuade sellers with other available properties in their areas.
“It kind of feels like a game of Tetris,” said Bull. “Where we’re looking at the whole playing board, and we’re trying to place people and strategically move people around in a way that best fits their lifestyle.”