What's Really Going on with the Real Estate Market?

If you’ve paid even the slightest attention to the current state of the housing market you probably already know that it's one of the hottest seller's markets in history. There are bidding wars for properties all over the countries, buyers are showing up with all-cash offers, and traditional hurdles like inspections are being tossed aside.

In Denver, 75% of homes on the market are selling within a week. 90% sell within a month.

Why the frenzy? It's a variety of factors, including the pandemic and a national housing shortage. Covid drove down inventory (did you really want random buyers wandering through your home in the middle of a pandemic) that we're still working our way out of. At the same time, as more and more people began working from home they suddenly realized that where the lived didn't matter as much as it once did, leading to a surge of interest in beach towns, mountain locations and other vacation spots. Couple that with record-low interest rates and you have a recipe for a super-heated market.

The result? Sellers are starting to ask for the moon.

By the numbers: According to a recent survey by Realtor.com, about 30% of sellers today are listing their homes for "more than they think it's worth," with 53% expecting to at least get their asking price for the property. One in four sellers expects to get more than asking, while 16% are anticipating an all-out bidding war.

The median home list price nationwide hit a record high of $375,000 in April, up 17% in just a year.

Quote: “The big takeaway is that sellers are fully aware of the competitive housing market,” says George Ratiu, realtor.com’s senior economist. “The majority of the homeowners expect to get more than they paid for their homes. And many of these sellers did not buy their homes long ago.”

My take: This might seem like the end times for homebuyers, but like everything this too will pass. We're experiencing a perfect storm right now -- pent up demand, super low inventory, low interest rates and lots of investor cash floating around looking for a place to land, (and did I mention the ultra high lumber prices right now that are pinching new home contruction?) -- but it won't last forever. Once more homes become available things should settle down. Prices may not fall, but at least every home purchase won't involve all-cash offers and bidding wars.