The market has been anything but normal over the past year. As it starts to potentially slide back into its regular rhythm, buyers may find themselves in unfamiliar territory. For almost 12 months, the market inventory has been so low that buyers have become used to bidding wars. It was rare to find a properly priced home for sale that wasn’t receiving multiple over-asking offers after a mobbed open house. However, with more homes coming on the market, listings receiving unusually large amounts of offers will begin to dwindle.
This is exactly what frustrated buyers have been begging for from the market for the past 12 months. Yet, without fail, buyers will begin to question “what is wrong with that house?” if it only gets one or two offers or is on the market for longer than a week. Talk about kicking a gift horse in the mouth.
Humans are predictable creatures; we want what other people want. An item is about to sell out? It must be good, we should buy it. A house has 13 offers? It must be great we should submit one too.
The market is finally showing signs that a greater selection of homes may be available to buyers. A large percentage of the buyers that were fighting over homes in the winter and spring have found their homes, or some have decided to wait incorrectly thinking that it’ll be easier next spring. That, combined with the more sellers listing their homes means there is now less competition for buyers and essentially, fewer offers on homes.
The chart below shows the percentage of homes placed under agreement out of the total number of homes on the market on a weekly basis. The aqua line is 2021 and in the past few weeks, that percentage has been lower than we have seen in months. Although historically speaking it’s still very high as you can see compared to prior years. This means that more inventory is lingering on the market now that more homes are being listed. Selection is increasing, fewer homes are being sold after bidding wars, and some homes may even take a few weeks to sell. None of these factors point to anything having to do with the home’s condition; it’s instead a market condition. And a beneficial one at that, for buyers.
When you look at the images below (click to make larger), you can see examples of a home being listed in two different circumstances. When it was initially listed, the home lingered on the market long enough to expire for a bit and was eventually withdrawn. The very same home was relisted again later in the year, and quickly sold for considerably more money than it was listed for the first time.
The moral of the story for buyers? From now to mid-fall will be the best time for you to buy in over a year and a half. Less competition means you have better odds of getting a great home without having to pay over asking. If you wait to buy, that very same home could cost you much more come the fall or spring when buyers are out in droves once again. This phenomenon is typical in the fall- when the market swings into the buyer’s favor and more homes are available, it sometimes takes a home longer to sell than it does when it is a seller’s market. Buyers are so conditioned to see homes sell quickly after a bidding war, that when the real estate climate cools down buyers then think the home has a scarlet letter on it if they don’t have to fight for it.
Winter will bring another bout of low inventory and high demand, and if so, we will then be in the same situation that’s been making it hard for buyers all along.
Furthermore, we are getting comfortable with the historically low mortgage rates, but no one can guarantee that they stay this low. If and when they rise, obtaining a loan is going to cost that much more money, meaning that buyers won’t be able to afford as much house due to the higher monthly cost of the loan. So again, now is the time to buy!