Crazy. Horrible. Grueling. These are the words real estate agents use when asked to describe the current state of the market and what it’s like to buy a home today. Buyers are facing unprecedented challenges, they say, due to a confluence of housing market conditions:
- Pricing. Redfin reported earlier this month that the national median home-sale price hit a record high of $377,200 in May, up a record 26% year over year. Over half of homes — 54% — sold above their list price in May for the first time on record.
- Bidding wars. Redfin also reported this month that seven in 10 buyers — 70.4% — faced bidding wars in May. That’s down slightly from the prior month, but it still indicates that house hunters are facing unprecedented levels of competition as demand skyrockets.
- Lack of inventory. Real estate agents cited a lack of inventory as the main hurdle preventing their clients from completing a transaction, according to the National Association of Realtors. Due to the pandemic, homeowners have been reluctant to list their homes, so available homes — in any condition — get snapped up quickly.
Donna Deaton, managing vice president of Re/Max Victory + Affiliates in Cincinnati, who has 19 years of experience, sums up the current buyers’ market as follows: “It’s absolutely horrible,” she said. “We don’t have any inventory. If you’re an FHA or VA buyer, you don’t stand a chance. If it’s a new property on the housing market in an ideal location and move-in ready, it’s a cash buyer or a minimum 20% down buyer. Most of the buyers in this area are putting offers in with no appraisal gap — willing to take care of anything that doesn’t appraise — and no inspections, which makes me cringe.”
So, what does this mean for buyers? Should they give up?