The extreme pandemic-driven seller’s market is intensifying and will likely last through the first half of the year.
In the week ending January 24, home-sale prices soared 18% and pending sales grew 28% from the same period last year. Fifty-five percent of homes that went under contract that week found a buyer in 14 days or less—the largest share to sell that quickly in at least nine years (Redfin data on this measure goes back through 2012).
“The main thing going on is scarcity of homes for sale. There’s nothing there, so people want it even more,” said Seattle Redfin real estate agent Scott Petrich. “Potential homebuyers who don’t have a good amount of savings are having a very hard time getting a house right now because the lack of supply is driving up prices, while low mortgage rates increase demand.”
Both the number of homes for sale—down 36% from a year ago during the week ending January 24—and the rate that new homes are being listed for sale—down 13%—are falling from last year’s already-low levels. The average home spent just 34 days on the market before selling—20 days less than the same time a year ago and also a record low for this time of year as far back as our data for this measure goes.
“There will continue to be a lack of new listings in early 2021,” said Redfin chief economist Daryl Fairweather. “But rock-bottom mortgage rates will have buyers eager to purchase the few listings that do hit the market. So I expect bidding wars, fast sales and double-digit price growth to continue. We are at a point in the pandemic where would-be sellers are expecting to be vaccinated in the next 6 months, so they may be waiting for that before selling. Once many more people are vaccinated for the coronavirus and more homeowners start to feel comfortable listing their homes for sale, the current deadlock of housing supply should start to loosen. Mortgage rates could inch up at the same time, which could bring a slight chill to the scorching-hot seller’s market.”
Homebuying demand, which typically slows through the winter, is 60% above where it was last year. This is according to the Redfin Homebuyer Demand Index, which measures requests to Redfin agents for homebuying services such as home tours and making offers to purchase a home.
“I don’t see the market slowing down at all in the next few months,” said Phoenix Redfin real estate agent Van Welborn. “People are confident in the market and people are buying homes. And it seems like nothing is holding them back: There was absolutely no slowdown for the holidays, the election didn’t affect anything, and the attack on the Capitol didn’t register on the housing market at all.”
While the hot market is largely only benefitting the few people who are selling their homes this winter, there are many people who simply couldn’t have afforded to buy a home within a short commute to work who are taking advantage of the flexibility of remote work and moving to where they can afford home prices and more space.
“It used to be that homebuyers who were priced out of the closer-in suburbs would look farther out for a home they could afford and compete for,” said Petrich. “Thanks to remote work, there has been a huge shift in homebuying demand to the farther-out, less expensive suburbs. It was very competitive before, but it has become much more intense now that people need more space.”
