The housing market increased to its fastest pace on record in May, according to Redfin, a real estate brokerage.
The average home went under contract after 42 days, a decrease of one week from last year, and the lowest median days on market since Redfin began tracking them in 2009.
“After almost a decade of undersupplied housing stock, competition is fierce,” Redfin Chief Economist Nela Richardson said. “What’s new in 2016 is that we’re seeing the intensity of fast sales and bidding wars even in affordable markets like Grand Rapids and Omaha, where the typical home sold within two weeks last month.”
Sales also increased by 7% while inventory decreased by 6.6% annually. Sales increased by double digits in almost one third of the markets Redfin tracks. Affordable markets in the Midwest and the South had the most surge in sales.
In fact, Detroit and Grand Rapids, Michigan saw increases of more than 50% annually in number of homes sold.
“We’re seeing an influx of buyers from places like San Francisco, Southern California, Seattle and Washington, D.C.,” local Redfin agent Kent Selders said. “Most new residents are lured by tech jobs and opportunities to work remotely.”
“Locals are watching prices rise, and many realize if they don’t buy soon, they’ll miss out while homes are still affordable,” Selders said. “The result is incredible demand and rapid sales. Nothing like this has ever happened in Grand Rapids.”
Mortgage rates, which reached three-year lows this spring, and continue to decrease, are also making an impact on buyers.
“Move-up buyers have specifically noted they are buying now to take advantage of still-low mortgage rates,” said William Porterfield, a Redfin agent in Little Rock, Arkansas, where sales increased 33 percent from a year ago. “They’re focused on buying as much house as possible while interest rates are so low.”
Americans are even starting to lose faith that the housing crises that began almost a decade ago is over, according to a survey released by the MacArthur Foundation, which supports creative people, effective institutions, and influential networks building a more just, verdant, and peaceful world. A vast majority of those surveyed, about 81%, still believe that affordability is a problem.