The buying frenzy continues as multiple offers become the norm and buyers offer thousands or tens of thousands above the asking price to try to get the home they want. In many cases, buyers also are increasingly waiving appraisals and even some inspections to make their offers stand out.
Buyers are also feeling a greater sense of urgency as mortgage rates begin to rise, and they’re eager to lock in a low rate ahead of any further increases.
“Fifteen offers, 25 offers, we even had one last week with 97 offers—and the list price is the starting point,” Mark Wolfe, broker-owner of RE/MAX DFW Associates, told the Dallas Business Journal. “An agent in our firm received 17 offers on a property before they cut off receiving additional offers. Twelve of the offers were cash, all above list, and most buyers not even seeing the home. They are just grabbing.”
Nationwide, 36% of homes sold above list price in February, the highest share on record, according to housing data from Redfin. The most competitive markets in February were Oakland, Calif., where 70.5% of homes sold above list price, followed by San Jose, Calif. (66.6%); Tacoma, Wash. (65.7%); Sacramento, Calif. (62.3%); and Austin, Texas (57.3%), according to Redfin’s research.
“This is the strongest seller’s market since at least 2006,” says Daryl Fairweather, Redfin’s chief economist. “Buyers outnumber sellers by such a huge margin that many homeowners are staying put because they know how hard it would be to find a place to move to. It seems like the only move-up buyers who are confident enough to list their homes are those who are relocating to a more affordable area where they’ll have an edge on the local competition.”
Despite the rapid price increases, this isn’t a housing bubble, housing economists say.
“Yes, some buyers are overpaying for homes, particularly those who are moving to affordable destinations and paying well over asking prices to win homes in bidding wars,” Fairweather says. “But these buyers are often covering any shortfall in the bank’s appraisal amount and locking in low monthly mortgage payments that they can easily afford. As mortgage rates rise, I expect demand to settle down and be better balanced by more new listings as high home prices lure more sellers to the market.”