Bidding wars heat up, but buyers are undeterred

Home buyers in the U.S. are facing increasingly fierce bidding wars, but even as prices rise and competition heats up, they’re not giving in.

A new survey by the National Association of Home Builders last week found that around 40% of prospective home buyers have been unable to purchase one because they keep getting outbid, CNBC reported. One year before, the main reason people couldn’t find a home to buy was due to unaffordable prices.

A second survey by Redfin found that 56% of its agents said they’ve faced a bidding war when making offers on behalf of their clients. It seems that bidding wars occur most frequently on higher priced homes in the $800,000 to $1 million region, Redfin reported.

Redfin’s chief economist Daryl Fairweather said he expects bidding wars to become more common this year, involving even more buyers.

“The best thing buyers can do is prepare: Prepare to see homes quickly as soon as they hit the market; prepare by talking to a lender and getting preapproved; and prepare by talking to your agent about how much a home you like is worth so you can go into a bidding war with your strongest offer tactics, but know when to back away if the price escalates more than you’re willing to pay,” he said.

The Redfin survey found that Salt Lake City, where 90.2% of all bids face competition, sees the most bidding wars, followed by San Diego (78.9% of all offers), the San Francisco Bay Area (77.1%), Denver (73.9%) and Seattle (73.8%).

CNBC said that bidding wars are being driven by a combination of record low mortgage rates and low inventories in most housing markets. The number of homes for sale in the U.S. was down 43% in January from one year ago, it said.

“Lower mortgage rates are making monthly payments for higher-priced homes more manageable,” Danielle Hale, realtor.com’s chief economist, told CNBC. “But finding a home that checks the right boxes amid limited supply, and saving up for the larger down payment needed with higher home prices, continue to be challenging, especially for first-time home buyers who haven’t accumulated home equity as prices have gone up.”

Source: realtybiznews.com

Redfin survey shows greater optimism for housing in 2021

Around 60% of home buyers and sellers said in a survey by Redfin that they’re optimistic that the housing market will improve in 2021, which is a big leap on what people said in a similar survey the previous year.

High earners and homeowners are the most upbeat about housing’s prospects, the survey of 1,400 people conducted in November and December found.

Almost three quarters of people who make more than $150,000 a year said they believe the housing market will fare better this year than it did in 2020, which is the highest proportion of any group, as determined by their income. In addition, 64% of homeowners said they believe housing will do better this year than it did in 2020. Sellers generally expressed more optimism than buyers, which is likely explained by the recent double-digit gains in home prices.

“Most homeowners are well aware that their home value has increased and they’ve become wealthier on paper over the last year, and they’re optimistic it will continue this year,” said Redfin Chief Economist Daryl Fairweather, in a statement. “That belief is well-founded. I expect price growth to continue throughout the year as remote work culture drives interest in moving to bigger homes in rural and suburban areas.”

Fairweather said that existing homeowners are the most likely to benefit from a hot housing market. On the contrary, first-time buyers will have a much harder time breaking into the market in 2021 than they have had in recent years.

De4spite that, around half of all renters in the U.S. say they’re optimistic about housing in 2021, Redfin’s report found. Renters might be drawn into home ownership by the prospect of record low mortgage rates and the likelihood of more inventory coming onto the market this year, Fairweather said.

“But renters hoping to become first-time home buyers are also more discouraged by rising prices and competition because they don’t get to use the proceeds from selling their current home to buy a new one,” he added.

Source: realtybiznews.com