Buyers Face Intense Competition Amid Red Hot Housing Market
While life is beginning to look a little more normal in many regards, the real estate market continues to
run wild. The number of new listings hitting the market still lags behind pre-pandemic levels by 26%, per
the latest report from Realtor.com. The inventory shortage combined with high buyer demand—due to
low interest rates and an uptick in opportunities to work remotely—is amounting to one of the most
competitive housing markets ever.
Buying a Home Is More Competitive Than Ever
In fact, as of April, homes were selling three weeks faster than they were during the same time the
previous three years, with a U.S. average of 43 days on market. Prices are trending upward, too, as
sellers retain the upper hand.
Seller Expectations Are High
A recent survey conducted by HarrisX on behalf of Zillow found nearly 1 in 3 homeowners intend to ask
for more than they think their home is worth—and expect buyers will pay. A whopping 94% are
confident they will make a profit when selling, with 1 in 10 expecting to “get double what they paid for
The median national home price for active listings rose to $375,000 in April, up 11.6% from the same
period in 2020. Fortunately, experts predict more sellers will enter the market in the coming months,
tempering buyer woes to some degree.
“After stay-at-home orders brought the housing market to a halt last spring, especially for sellers who
re-thought their plans, 2021 is shaping up to be more typical” said Realtor.com Chief Economist
Danielle Hale. “That lack of activity is causing this year’s more normal trends to look like a huge
improvement, and it is. However, when compared to pre-pandemic levels it is very clear we are still not
on par with the number of sellers we saw in 2017 through 2019, which is helping to drive one of the
most competitive seller’s markets of all time. Home prices are continuing to surge and sales are
occurring nearly three weeks faster than a normal spring home-buying season.”
How Smart Buyers Are Structuring Offers
Steep competition means buyers and agents are turning to ever more creative strategies when submitting offers. Unsurprisingly, cash reigns supreme. According to a recent report from Zillow, 4 in 5 (77%) agents say they have submitted all-cash offers recently and 41% say it’s proven to be the most effective strategy in today’s market.
Of course, many buyers don’t have this option. As such, a little more than 1 in 5 (21%) are offering a higher down payment or more earnest money, and 25% are attempting to beat others out by submitting an offer before the review date.
According to Zillow, more unconventional strategies that agents are using include offering leaseback, throwing a pizza party, and sending flowers to sellers.
Waiving contingencies is another common tactic, but Zillow points out the inherent risks in doing so in its report—specifically, the fact it, “puts buyers at risk of unknown structural, mechanical or safety defects, which can be incredibly costly to the buyer.” Some sellers, however, have come to expect as much. Realtor.com data show 16% are counting on buyers waiving financing, appraisal, or home inspection contingencies, and nearly a quarter of sellers (24%) don’t anticipate paying for any home repairs or improvements.
“For buyers looking for a home in today’s fast-moving housing markets, it’s important to be prepared to move quickly,” says George Ratiu, senior economist at Realtor.com. “Having financing lined up, knowing the neighborhood, and sticking to their budget’s upper limit would help to make a stressful experience more manageable.”