This article was written by Nicole Friedman and originally published by The Wall Street Journal on November 11, 2021.
American home buyers are having to pounce faster than ever to clinch a deal, forcing many of them to make snap decisions about what house to purchase and how much to pay.
Home sales between July 2020 and June 2021 sat on the market for a median period of only one week before going under contract, according to a survey released Thursday by the National Association of Realtors. That is down from three weeks a year earlier and marks a record low in data going back to 1989.
The rapid turnover helps explain how the number of homes sold rose to multiyear highsduring the Covid-19 pandemic, even as the inventory of homes for sale remained stubbornly low.
The pandemic helped spark the biggest housing boom in more than a decade. Buyers that kept their jobs sought more space to work remotely and took advantage of low mortgage-interest rates. Many households also saved more during the pandemic and benefited from a rising stock market.
At the same time, supply has been constrained. Caution about showing homes during Covid-19, a reluctance among some owners to enter the competitive housing market and the ability to refinance at low rates kept many prospective sellers from listing their homes.
In such a fast-moving market, buyers have little time to commit to one of the biggest purchases of their lives and sometimes forego traditional safeguards. Many buyers have waived their rights to terminate a contract because of a low appraisal or unfavorable inspection to make their offers more competitive in a bidding war.
“There’s no plotting of where the Christmas tree will be and measuring for a couch in that scenario,” said Jessica Lautz, NAR’s vice president of demographics and behavioral insights. “You really are making that decision very fast.”
Leah and Ian Evison moved from St. Paul, Minn., to Seattle in January to be closer to their daughter and her family. When they started house hunting in Seattle, they learned that houses typically went off the market within days of being listed, and showings were often limited to 30 minutes each.
“It felt awful,” Ms. Evison said. “We wanted to move here so much that we were willing to do it, but it felt really ridiculous.”
After two unsuccessful offers, the Evisons bought a three-bedroom house in March following a bidding war.
Homes typically sell slightly below their listing price, but in the year ended in June the median sales price was the full asking price, the highest since NAR started tracking the data in 2002. The median sale price for that period was $305,000, up from $272,500 the prior year, NAR said.
In September, the markets where homes sold the fastest were Indianapolis; Denver; Grand Rapids, Mich.; Seattle and Tacoma, Wash., according to real-estate brokerage RedfinCorp.
Tools that enabled shoppers to tour houses remotely and schedule showings online also helped speed up the home-buying process in the past year, real-estate agents say. A large proportion of cash buyers, including investors, is also contributing to the market’s fast pace, they say.
The continued shortage of homes on the market means many buyers are stuck on the sidelines. About two-thirds of active buyers have been house-hunting for at least three months, according to a September survey from the National Association of Home Builders. About 45% of those shoppers said they hadn’t been successful because they kept getting outbid by other buyers.
The hot housing market has cooled slightly in recent months, as many buyers don’t want to move during the winter holidays. But real-estate agents say many homes are still selling quickly and with multiple offers. Active listings in the four weeks ended Oct. 31 fell 22% from a year earlier, according to Redfin.
“Instead of a house lasting three days on the market, it’s lasting seven days,” said Harold Torres, a real-estate agent in Orlando, Fla. For buyers, “negotiation and any type of wiggle room is not really there yet.”
Some buyers might also be eager to shop during the typically slow holiday season in hopes of facing less competition, said Mike Miedler, chief executive of Century 21 Real Estate LLC, a subsidiary of Realogy HoldingsCorp.
“There’s so many folks out there who have been sidelined, and there’s definitely pent-up demand,” he said.
Anshul and Angharad Bhardwaj started house hunting in the Salt Lake City area in September 2020 and made more than 20 unsuccessful offers on homes, Mr. Bhardwaj said. They increased their budget and expanded their search area.
They made an offer on a house within an hour of touring it and were told it was already under contract, Mr. Bhardwaj said. They submitted a backup offer and ended up buying the house for $780,000 in February, after the initial offer fell through.
“It was an emotionally challenging time for both of us,” Mr. Bhardwaj said. But based on the house’s price appreciation since then, “I couldn’t have been able to buy my house had I waited for six more months,” he said. “I am happy I pulled the trigger.”
NAR polled about 5,800 people who bought primary homes in the year ended in June.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from NAR.
