Boston condo wars
Market competition has eased up, but seven in 10 buyers still face bidding wars during the homebuying process, according to a new report from Redfin.
In May, 70.4% of the home offers written by Redfin agents faced at least one competing bid, down from 73.6% in April but much higher than the 52.7% seen in May 2020 when the onset of the pandemic slowed the housing market due to lockdown orders.
Redfin attributes the monthly decline to seasonality possibly quieting the homebuying season; competition usually tapers in the early summer.
Bidding wars have become commonplace in today’s market, especially since the pandemic led to lower mortgage rates and flexible work policies. The shortage of housing inventory further exacerbated the pressure on the market and led to even fiercer competition.
However, there are early signs that the market may be cooling off. For example, home-purchase applications have been declining since March, and pending sales have declined10% from their peak earlier this year.
According to Redfin chief economist Daryl Fairweather, “The housing market was going 100 miles per hour and now it’s down to 80.” Fairweather said that some house hunters are starting to sit out the market because they’re either “priced out or burned out.” And with stay-at-home orders slowly being lifted, more Americans are spending their money on travel and dining out instead of tossing their hats into the housing market.
Chicago saw the rate of bidding wars decline 2% on a monthly basis to 64.8% in May. Comparatively, only 37.7% of Chicago Redfin offers faced bidding wars in May 2020.
Spokane, Wash., had the highest bidding war rate of the 50 U.S. metropolitan areas in Redfin’s report, with 86.7% of offers facing competition in May, followed by Raleigh, N.C., (84.5%), Tucson, Ariz., (81.8%), Salt Lake City (81.5%) and Charleston, S.C., (79.3%) rounding out the top five.
Just like with any product or service, the law of supply and demand impacts Boston condo prices. Any time that there is less supply than the market demands, prices increase.
In many areas of Boston, the supply of homes for sale in the starter and trade-up condo markets is so low that bidding wars have ensued, and the busy spring-buying season is just around the corner.
CoreLogic recently conducted an analysis on national home prices at the time of sale for their January 2018 MarketPulse Report and found that a third of homes sold for at least list price.
“The share selling above list price was almost three times the trough in January 2008 and represented more than one-fifth of total sales.”
Increased demand during the spring and summer months, the traditionally busier seasons for real estate, will no doubt influence how many homes continue to sell over list price.
This should not be seen by sellers as permission to overprice their Boston condos, though. Buyers are becoming more and more educated, especially those who have been searching for their dream homes for a while now while waiting for new inventory to come to market.
Realtor.com gives this advice:
“Aim to price your property at or just slightly below the going rate. Today’s buyers are highly informed, so if they sense they’re getting a deal, they’re likely to bid up a property that’s slightly underpriced, especially in areas with low inventory.”
Without a large wave of new listings coming to market, buyers will continue competing with each other for the homes that are available. If you are thinking of selling your home, now may be the time to do so before more competition comes this spring. Contact a local real estate professional who can help you determine the demand for your house in your area.
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Updated: Boston real estate for sale 2021
Updated: Boston condos 2021
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Updated: Boston Real Estate 2021