Limited Housing Availability Driving Buyers to Extremes A Redfin real estate yard sign is pictured in front of a house for sale on October 31, 2017 in Seattle, Washington. Seattle has been one of the fastest and most competitive housing markets in the United States throughout 2017. (Stephen Brashear/Getty for Redfin)
By Nick Koutsobinas | Friday, 07 May 2021 10:16 PM
Home buyers are being driven to extremes to procure a new or first-time property as the inventory for homes remains low and the prices high.
According to CNN, the number of homes available to buy in April dropped 40 percent from 2020 and by 50 percent from 2019; as a result, housing prices are up 20 percent from last year. But Redfin's Chief Economist Daryl Fairweather says it may actually be a good thing.
"I am concerned about how we as a society are going to reckon with just how expensive housing has become."
But, says Fairweather, "I'm not worried about a housing crash because these sky-high prices are supported by the new reality of well-funded buyers who are often benefiting from newfound mobility via remote work. As the economy recovers, we have the opportunity to reimagine our country's role in supporting a healthy housing market. For instance, we can subsidize construction of affordable homes or support first-time homebuyers in underserved communities. We have our work cut out for us when it comes to ensuring homeownership is attainable for middle-class Americans with good jobs and money saved up, not just for the wealthiest among us."
Real estate agent Javier Vidana with My Home Groupin Phoenix joked about what current home buyers are going through.
"Say, 'Seller, we'll give you $100,000 over [asking] price, and we'll give it to you in cash,'" he added. "Say those words and you got the house!"
Bidding wars and buyers taking greater risk is typical. Some buyers are waiving the right to walk away if the home is not appraised for the price offered or turning down costly repairs. Others are sending "love letters" or extravagant gifts to make their bids stand out.
One couple, Matt and Hailey Melott, went out bidding on ten homes before their offer was accepted.
"We got to the point where we were offering $450,000 on homes listed at $400,000, waiving the inspection and the appraisal and still losing out. We felt so hopeless. You either have cash in this market or you don't," Matt Melott said.
Finally, the Melott's found a home that had been on the market for 16 days. A trend of metrics in 2020 points to 46 percent of homes that went under contract are sold within a week.
Mellott's offered the list price of $436,000 for the 1,800-square-foot home and had it accepted.
One couple purchasing a home in Rumson, New Jersey, for $1,500,000 offered the sellers $50,000 above the asking price and a stay at their St. John villa in the US Virgin Islands.
The National Association of Realtors stated that writing "love letters" may run afoul of the Fair Housing Act.