Propelled by a nationwide inventory shortage, such growth hasn’t been seen since July 2013 and is fueling a market in which buyers have to outbid competitors with higher and higher offers. Thirty-six percent of homes sold last month went for more than their asking price, the highest number the brokerage has tallied since it began tracking the data in 2012.
While the situation is advantageous for homeowners, a vast majority of those selling also want to buy — a situation that is stalling the market as homeowners wait to list out of fear that they will not be able to find a home to move into. The number of homes sold fell 3.6 percent from the previous month to 627,400 while new listings dropped 16.4 percent year over year to 564,900.
“This is the strongest seller’s market since at least 2006,” Redfin Chief Economist Daryl Fairweather, said in a prepared statement. “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.”
All numbers point toward a market in which homes sell very quickly — the average home spent 32 days on the market in February, down from 55 at the same time in 2020. Supply is at 1.5 percent, the lowest it’s been in months.
The only city out of the country’s 85 largest metropolitan areas not to see home values increase was San Francisco, where places stayed flat due to the large exodus out of the city amid the pandemic. Suburbs like Connecticut’s Bridgeport and New Haven and New Jersey’s Camden saw the steepest increases in the U.S. at 31, 31 and 24 percent, respectively.
In large part because their markets were already extremely competitive, expensive coastal cities are the only locations to see a slight softening of the market — San Francisco and San Jose were the only two cities to see their active listings increase by 22 and 20 percent, respectively. Utah’s Salt Lake City, Pennsylvania’s Allentown and Louisiana’s Baton Rouge saw their listings drop by 67, 60 and 58 percent.
“Even though the market feels reminiscent of 2006, we aren’t in a bubble,” Fairweather said. “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. 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.”