It’s a great time to be a home seller, but home buyers are feeling the competition—which is only growing. Homes sold faster in September than in August, realtor.com® reports in its September Monthly Housing Trends Report. September is usually the best time of year to buy a home since more homes tend to go on the market and there is less competition. Not in 2020.
The pandemic has fueled a buying spree that has led to a very competitive fall market for home shoppers. The average buyer is paying about $20,000 more for a home and facing 25% more competition than at the start of the year, realtor.com® reports. The number of homes on the market also has plunged 39% year over year in September, which equates to 529,000 fewer home listings.
“Many buyers tend to put their home search on hold after the start of the school year, but remote learning and the desire for more space continued to fuel buyer interest in September,” says Danielle Hale, chief economist at realtor.com®. “Unseasonably high buyer interest coupled with historically low inventory and favorable mortgage rates are creating a perfect storm in the housing market. While this is good news for anyone looking to sell their home, it has created tremendous competition among buyers.”
Homes are selling 12 days faster than normal. There are about 25% more buyers in the market compared to the start of the year. Typically, there are only 9% more buyers in the market in September compared to the beginning of the year, realtor.com® notes.
Properties are selling the fastest in the Northeast, where properties are spending 13 fewer days on the market compared to a year ago, followed by the South (11 days faster), the Midwest (9 days faster), and the West (7 days faster).
All of the nation’s 50 largest metros are seeing home prices rise compared to last year. In the Northeast, average home prices have jumped 12.8% compared to a year ago, followed by a 10.9% annual increase in Midwestern metros, an 8.6% increase in Western metros, and a 7.2% uptick in Southern metros. Some of the metros seeing the highest year-over-year price growth are Cincinnati, Ohio-Ky.-Ind. (+16.9%); Boston-Cambridge-Newton, Mass.-N.H (+16.4%); and Philadelphia-Camden-Wilmington, Pa,-N.J.-Del.-Md. (+15.6%).
The pandemic has prompted homeowners to reevaluate where they call home. Sears Home Services recently surveyed about 1,000 people nationwide on how they feel about home since the pandemic and the results show a growing dissatisfaction. Forty-four percent of respondents said they are less satisfied with their home since the beginning of the pandemic.
“There’s a sense of feeling ‘trapped’ when it’s required to remain inside; we’re missing the venues we used to frequent and perhaps noticing flaws of the home while spending more time there,” the survey notes.
Households with children all living in smaller spaces are more likely to be linked to owners’ dissatisfaction. Homeowners with children were 10 percentage points more likely to say they felt less satisfied with their home than those without. Also, homeowners with only one or two bedrooms were more likely to report being unsatisfied with their homes.
The growing dissatisfaction among homeowners after being hunkered down may be a big factor behind the surging housing market. Contract signings on homes surged to a record high in August and are now 24% higher than a year ago, the National Association of REALTORS® reported Wednesday.
Since the beginning of the pandemic, 42% of respondents say it’s more difficult to find “alone time” inside their home. Seventy-nine percent of respondents admitted to telling a lie in order to just get alone time at home. People with children were more likely to tell a lie for that reason. Thirty-eight percent of respondents said they used their alone time to work on a home improvement project. Studies have linked home improvement with helping people feel a sense of enjoyment and offering a boost to their mental health.
Survey respondents said the four top features they most want to add to their homes are a home gym (41%), home office (37%), gaming space (32%), and kitchen space (31%).
Bathrooms tend to be smaller spaces, making it easier for house hunters to miss things during a virtual tour. Potential problem areas may require further inspection. Sometimes real estate pros need to be the in-person eyes during their buyers’ search for properties online.
Realtor.com® recently highlighted several bathroom problems that can be “hidden” during a virtual tour. Here are a few things to look for:
Under the sink. It’s important to look for any water damage inside the cabinets under the sink. “The bathroom is the number one place for water damage, so it’s a good idea to check under the sink for leaking,” Kari Haas, a real estate professional at Windmere Real Estate in Bellevue, Wash., told realtor.com®. Also, if possible, zoom in on fixtures during the virtual tour to look for any corrosion or leaks. Real estate professionals also may want to turn on the faucets of the sink, tub, and shower to check water pressure.
Squishy floors. Agents should zoom in on the floors in the bathroom. “Look to see if there are any areas of cracking in the floor tile, separation, or damaged grouting, or any ‘softness’ felt underfoot that could indicate issues with any past or current plumbing or a pest issue,” Wendy Gladson, a real estate consultant at Compass in Los Angeles, told realtor.com®.
Mildew. Inspect the condition of the tile grout even further. “If there are gaps, there could be hidden damage behind the walls, and if there is mildew, it speaks to ventilation and poor maintenance,” Gladson adds. Agents should also open and close shower doors for their virtual buyers to help them ensure they function correctly.
A faulty toilet. On a virtual tour, agents also need to focus on the toilet. Here’s one test, other agents suggested to realtor.com®: Stand over the toilet and jump up and down to see if the toilet is loose and needs a new wax ring. Check to make sure the flooring is solid too. If not, there could be rot.
Smell. Agents may be asked to comment on any odors in the bathroom. An air freshener present could be masking an issue with plumbing or mold, agents warn. “Homes on a septic system that have a strong odor could be a sign of an issue that could cost you more later,” Gladson told realtor.com®.
The 30-year fixed-rate mortgage neared its all-time low this week, averaging 2.88%. The record low was 2.86%, set in mid-September.
The low rates are turning into a boon for the housing market. The National Association of REALTORS® reported this week that housing contract signings in August jumped 24% year over year. Pending home sales are exceeding pre-pandemic levels, with all four major regions of the U.S. posting higher sales activity.
“As a result of low mortgage rates that have stayed under 3% since July, the housing market has seen a strong, upward trajectory during a very uncertain time,” says Sam Khater, Freddie Mac’s chief economist. “We’re seeing potential home buyers who now have more purchasing power and many current homeowners who have the option to refinance their loan for a better rate. However, several factors could disrupt this activity including high home prices, low inventory, and lender capacity.”
Home prices have climbed as housing inventories remain low. NAR recently reported that the median existing-home sales price was $310,600 in August, up 11.4% compared to a year ago ($278,800).
Freddie Mac reported the national averages with mortgage rates for the week ending Oct. 1:
30-year fixed-rate mortgages: averaged 2.88%, with an average 0.8 point, falling from last week’s 2.9% average. A year ago, 30-year rates averaged 3.65%.
15-year fixed-rate mortgages: averaged 2.36%, with an average 0.7 point, falling from last week’s 2.4% average. A year ago, 15-year rates averaged 3.14%.
5-year hybrid adjustable-rate mortgages: averaged 2.9%, with an average 0.2 point, unchanged from last week. A year ago, 5-year ARMs averaged 3.38%.
Freddie Mac reports average points with rates to reflect the total upfront cost of obtaining a mortgage.
Paint company Sherwin-Williams on Tuesday announced its 2021 color of the year: “urbane bronze.” The hue is said to instill calmness and has ties to nature, Sherwin-Williams says.
“The home is now the ultimate retreat from the world, and color is an easy and effective way to create a personal haven,” says Sue Wadden, director of color marketing at Sherwin-Williams. “Urbane bronze encourages you to create a sanctuary space for mindful reflection and renewal.”
The color trends of 2020 ushered in a return to bolder hues, moving away from the popularity of cooler neutrals that dominated most of the 2010s. Now, Sherwin-Williams describes the 2021 choice as “bold and understated at the same time.”
“Urbane bronze is a comforting color, drawing from nature for a feeling of relaxation and serenity,” Wadden says. “There’s also reassurance in its sentimentality, with nostalgic ties to the design of the ’70s and ’90s, but with gray undertones that give it a distinctly modern twist.”
Urbane bronze can work inside or out in a home, used as a primary or accent color in bedrooms, living rooms, dens, or home offices, Sherwin-Williams says. Wadden also points out it can be used to accentuate window trim, columns, and accent walls in commercial or residential spaces.
“Complement the simplicity of urbane bronze with natural materials—like wood finishes, organic stone accents, or woven textiles—and a variety of mixed metals to create a serene space grounded in nature,” Wadden says.
See how Sherwin-Williams’ 2021 color pick compares to Behr’s 2021 Color Forecast, which was announced in late August.
Since the start of the COVID-19 pandemic in March, there have been nearly 400,000 fewer homes listed than the same time period in 2019. That has created a large deficit in the housing supply at a time when consumers are rushing to buy. Home prices are increasing at double the pace of last year, and homes are selling 12 days faster than in 2019, according to realtor.com®’s Weekly Housing Report.
“Sellers are more reluctant to list their home, given the uncertainty over the economy and the pandemic environment,” says Javier Vivas, director of economic research for realtor.com®. “Buyers, on the other hand—especially hungry first-timers—remain largely unfazed by the challenges and are motivated by low mortgage rates and the fear of missing out on the right home.”
Further, the majority of sellers will go on to buy another home. “So even as new listings hit the market, another buyer is also added,” Vivas says. “Adding to the inventory issues, thousands of previously vacant homes, such as second homes and rentals, have been reoccupied by their owners during the pandemic, effectively taking them off the market.”
For the week ending Sept. 19, the number of homes on the market was down 39% compared to a year prior. Median listing prices are roaring ahead at a record pace, increasing 11.1% year over year and more than double January 2020’s price appreciation rate, realtor.com® reports.
Mortgage demand continues to climb as a buying frenzy extends beyond traditional seasonal patterns in real estate. Mortgage applications to purchase a home are now 25% higher than a year ago, the Mortgage Bankers Association reports.
Home sales are strongest on the high end of the market, where inventory is loosest, the National Association of REALTORS® reports. In August, the supply of homes worth more than $1 million was 44% higher than the year prior. Homes over $250,000 are also seeing more growth now than a year ago. Homeowners are looking to buy larger spaces to accommodate remote work, a pattern that “will be in place long after the pandemic is over,” NAR Chief Economist Lawrence Yun told CNBC.
Prices for existing homes hit another record high in August, climbing 11.4% year over year to a median of $310,600, NAR reports. Prices rose in every region of the U.S. last month.
“The demand for higher-balance loans pushed the average purchase loan size to another record high,” says Joel Kan, MBA’s economist. “The strong interest in home buying observed this summer has carried over to the fall.”
Dishwashers, refrigerators, washers and dryers, and other household appliances are low in stock nationwide, and some consumers are waiting months for their orders to be fulfilled. The backup is yet another problem you can blame on the COVID-19 pandemic.
First, as consumers started hoarding food, there was a rush on freezers. “We sold more freezers in two days than we did all last year,” Steve Sheinkopf of Boston-area Yale Appliance told NPR. “People were storing stuff because we thought this was the end of times. We needed food.”
Factories began scaling back production during the initial stages of the pandemic for employee safety and a belief that rising unemployment would lead to lower consumer demand. But demand for appliances has surged, while shipments of major appliances fell 7% year to date in June, NPR reports.
The surge in demand is due to people sheltering at home and using their appliances more, leading to breakdowns from overuse. Many homeowners also are seeking appliance upgrades. Now that the housing market is recovering quickly, there’s added pressure on appliance demand as consumers move to new homes.
Appliance manufacturers are warning of backlogs on several brands and models through the end of the year—and possibly even into 2021, NPR reports. “I have never experienced a year where there were shortages like we’ve seen this year,” Sandy Tau, owner of Long Island, N.Y.-based AHC Appliances, told NPR. “We have freezers that are on back order since the end of March that have still not come in.”
The pandemic has inspired a wave of home renovations as owners are spending more time in their homes. And renovators say it’s been good for their mental health, according to a new study conducted by CouponFollow of more than 1,000 homeowners and renters about do-it-yourself home projects they’ve tackled during the pandemic.
Thirty-four percent of respondents said DIY home improvement projects have aided their mental health during quarantine. Also, 49% of respondents said it’s given them a sense of enjoyment while being sheltered.
CouponFollow
Fifty-five percent of homeowners were motivated to tackle a home improvement project due to social distancing mandates keeping them in their dwellings more than they may have been accustomed to.
“The results of this study showed some of the few silver linings of the COVID-19 lockdown,” the researchers noted in the study. “For many, months spent stuck at home became productive times for home improvement. And by the results of these projects, homeowners and renters are pretty handy: Over half of those who took on DIY home improvement projects were successful.”
Eventual financial benefits of these home renovations also proved a motivator. About a quarter of respondents said they were looking to sell their homes within the next five years. Sixty-nine percent said they were holding off due to the pandemic.
The top three DIY projects during the pandemic have been bathroom repair, interior house painting, and bathroom decor. Broken out by generation, baby boomers have focused on their bedroom decor, while millennials have been more interested in bathroom upgrades and repairs. Generation X has focused on interior house painting projects.
Sales of newly built single-family homes in August reached their fastest pace since September 2006, the Commerce Department reported Thursday. They also attained another landmark: topping 1 million sales, to a seasonally adjusted annual rate of 1.01 million units. That marks a 43% jump when compared to last year.
“Already, more new homes have sold in 2020 than did in all of 2019,” says Danielle Hale, realtor.com®’s chief economist. “With the number of existing homes for sale down consistently and considerably from a year ago, new homes are an important segment of opportunity for home shoppers.”
But inventory levels of both existing and new homes may be preventing sales from stretching even higher. Housing inventories of existing homes is down 18.6% compared to a year ago. New-home sales fell to a 3.3-month supply in August.
“More construction is needed,” NAHB Chief Economist Robert Dietz says. “The challenge will be whether material and labor are available.”
Higher lumber costs and the limited availability of building materials in some markets is leading to higher prices in new-home construction. Lumber prices are now up more than 170% since mid-April, adding more than $16,000 to the price of a typical new single-family home, according to the NAHB.
The median price of a new home in August was $312,800. New-home sales were up on an annual basis in all four major regions of the U.S. The Northeast and Midwest each posted a 23.6% increase in August. The South saw sales rise 13.9%, and the West posted a 12.4% gain.
