When there are more home buyers than there are homes for sale, prices rise. Mostly, that’s because buyers have to compete with each other for available homes by offering to pay more than the seller is asking. But while competition and bidding wars are good for home sellers, it can cause stress for buyers. That’s why home shoppers in today’s market need to be prepared. In most metros, buyer demand is high while the inventory of homes for sale is low. That means, a lot of hopeful home buyers are facing competition. So how likely is it that you will? Well, according to one recent analysis, 53.7 percent of buyers faced a bidding war in June, which is up from 44.4 percent in April. Of course, how likely you are to find competition depends on where you’re looking and what you’re looking to buy. For example, buyers in Boston, San Diego, and Salt Lake City were almost twice as likely to face bidding wars than buyers in Miami, Chicago, Las Vegas, and Tampa. Similarly, buyers of single-family homes were more likely to face competition than those looking for townhouses or condos. (source)

A new survey of Realtors found that the vast majority say home buyers have returned and are eager to make a move. The survey, conducted by the National Association of Realtors, found 92 percent of respondents said their buyers have either returned or never left the market. But while buyers are coming back, they’re doing so with updated wish lists. In fact, 35 percent of Realtors said, because of the coronavirus outbreak, buyers have modified which home features are important to them. Additionally, nearly a quarter said buyers have changed the locations they’d like to target. Lawrence Yun, NAR’s chief economist, says being on hold because of the pandemic helped Americans focus on what’s most important to them. “A number of potential buyers noted stalled plans due to the pandemic and that has led to more urgency and a pent-up demand to buy,” Yun said. “After being home for months on end – in a home they already wanted to leave – buyers are reminded how much their current home may lack certain desired features or amenities.” Among the top features buyers added to their must-have list, home offices, more space, and a larger yard were the most commonly cited. (source)

According to the Mortgage Bankers Association’s Weekly Applications Survey, demand for loans to buy homes is now 33 percent higher than it was at the same time last year. The improvement comes after another week-over-week increase. It also comes during a week when mortgage rates hit an all-time survey low. Joel Kan, MBA’s associate vice president of economic and industry forecasting, says coronavirus news kept rates down. “Mortgage rates declined to another record low as renewed fears of a coronavirus resurgence offset the impacts from a week of mostly positive economic data, such as June factory orders and payroll employment,” Kan said. “Purchase applications continued their recovery, increasing 5 percent to the highest level in almost a month and 33 percent from a year ago.” In addition to finding purchase demand up from last week, the report found the size of the average loan is rising. In fact, the average purchase loan last week was $365,700 – further evidence that low inventory is driving home prices higher. The MBA’s weekly survey has been conducted since 1990 and covers 75 percent of all retail residential mortgage applications. (source)

It’s no surprise that Americans surveyed in March and April didn’t feel it was a good time to buy or sell a house. Coronavirus mitigation efforts had most of the country at home and unemployment was rising rapidly. But, since then, optimism has started to return. In fact, according to Fannie Mae’s monthly Home Purchase Sentiment Index – which tracks consumers’ perception of the market, jobs, and their financial situation – June saw a significant increase in the number of survey respondents who view home buying and selling conditions positively. In fact, the net share of participants who said it was a good time to buy rose 21 percent over the previous month, while optimism about selling rose 23 percent. Doug Duncan, Fannie Mae’s senior vice president and chief economist, says the rebound is encouraging, but challenges remain. “A second month of improvement in June allowed the HPSI to regain some of the sharp losses in optimism observed in March and April,” Duncan said. “However, this activity may cool again in the coming months, depending on the extent to which it can be attributed to consumers having chosen to delay or to accelerate home buying plans due to the pandemic.” (source)

In an effort to determine how affordable it is to buy a home, ATTOM Data Solutions looked at how much of the average wage earner’s monthly income is needed to make the mortgage payment on a median-priced home in counties across the country. The results of their recently released Q2 U.S. Home Affordability Report show 49 percent of US counties are now more affordable than their long-term historical average. That’s a significant improvement from last year, when the report found just 31 percent of counties affordable. Todd Teta, ATTOM’s chief product officer, says current market dynamics are encouraging for both buyers and sellers. “The latest affordability numbers reveal a win-win situation for sellers as well as buyers,” Teta said. “Prices are rising again around the country during the current home-buying season, despite worries that the economic impact of the coronavirus pandemic would halt the nine-year run up in home values. But a combination of wage gains and declining mortgage rates are helping to override the increases and make homes more affordable in large swaths of the United State.” The report found the counties where payments required the smallest percentage of wages were in the Midwest, with counties in Ohio, Wisconsin, and Michigan making up the top 5 most affordable. (source)

Luxury can mean different things to different people. So when you’re talking about the luxury home market, it’s good to define the parameters. After all, a $1 million home in Los Angeles isn’t the same as a $1 million home in Kansas City. Generally speaking, though, the luxury market is categorized as homes in the top 5-to-10 percent based on home value. And naturally, the high end of the market doesn’t always behave the same as other tiers do. So what’s been happening in the luxury market lately? Well, according to one recent analysis, the median home price in luxury markets has fallen 2.3 percent in recent weeks – at the same time the overall market has seen prices go up. Part of the reason for this is that the typical home buyer plans to live in the home they buy for many years, giving them some protection against temporary economic turmoil. Luxury buyers, on the other hand, may be more reluctant to make a large investment in times of uncertainty. Because of this, the ratio of available homes to interested buyers is different in high-end markets and can cause prices to move independent from the overall trend. (source)

There are a lot of things about a house that might cause a potential buyer to decide against it. Maybe it’s a great house but in the wrong location or it needs more work than they’re willing to do. In some cases, it might just be a bad fit for their lifestyle, needs, or budget. That’s why the typical buyer looks at least a handful of houses before deciding to make an offer on one. In this market, though, buyers may have to be more flexible. That’s because, the number of homes available for sale is lower than normal. In fact, according to new data from the National Association of Realtors’ consumer website, the number of new listings is between 17 and 21 percent lower than last year at the same time. And nationally, housing inventory is down 27.4 percent. Danielle Hale, the website’s chief economist, says new listings have improved but buyer demand is outpacing supply. “Our June data reinforces that buyers are out in force and serious about finding a home,” Hale said. “Although the new listings trend has improved, inventory continues to decline, indicating that what is coming onto the market is selling.” (source)