By: Charlie Wood
By now, anyone who has kept a casual eye on the real estate market knows that this is an extremely busy time. And for those who have waded into the market waters, whether as a seller or a buyer, certainly know the feeling well. We would like to share a little data with you to put some perspective on how all that pent up demand from the past 12 months has culminated in one wild spring. Historically speaking, one of the wildest spring markets we've ever seen.
According to data from Zillow, the share of U.S. homes purchased above their list price has been steadily rising since early last year after the housing market began to bounce back from a brief slowdown in the early weeks of the pandemic. An average of 20.3% of homes sold last year went for more than their list price, up from an average of 14.2% in 2019.
In April of this year, the U.S. median home price spiked 19.1% from a year earlier to a record $341,600, according to the National Association of Realtors. The pace at which homes are being bought has also been frenetic. Nearly 90% of homes sold in April were on the market for less than a month. Anyone who has been out there searching for a new home can relate to how quickly they hear of multiple offers within the first few days of a home being listed.
This demand has caused homes to sell over asking price. Last month, 19% of homes had their appraised value come in well below the contract price. In the same month the two previous years it was 8%. Buyers are simply willing to pay more than what the market data is giving them. This is having a huge negative impact on first time home buyers.
727 S. Dearborn Street, Chicago |$750,000
"First-time buyers in particular are having trouble securing that first home for a multitude of reasons, including not enough affordable properties, competition with cash buyers and properties leaving the market at such a rapid pace," said Lawrence Yun, NAR's chief economist. For every listing, there were an average of five offers, according to Yun. And a quarter of all buyers are making all cash offers, up from 23% in March and just 15% a year ago.
While more inventory came on the market in April compared to March, by the end of April total housing inventory was down 21% from one year ago, and still sits at near-record lows. The low inventory of homes continues to not only push prices higher but is also bringing the number of sales down, according to the report. Sales dropped 2.7% in April from March, the third straight month of decline.
747 N. Clark Street, Chicago |$1.6 million
With summer getting into swing, we will have to see how the market changes, if at all. Mortgage applications are down, perhaps a result of the holiday weekend, but it remains to be seen if the demand we have witnessed to date goes anywhere.
Be sure to check out our off-market listings here and scoop up your dream home before someone else does!