There has been a clear shift in market mood and sentiment ever since the COVID pandemic: whereas the Fed smashed mortgage rates to record lows, and the federal government delayed the foreclosure wave via forbearances. On top of this, socio-economic chaos in major metro areas resulted in an urban exodus like never before.
Daryl Fairweather, Redfin's chief economist, said, "new listings are getting snatched up right away."
"First it was, the faster you move, the more of an edge you have. Now if you don't put in an offer five days after it's listed, you're not going to be considered at all," said Fairweather
In the report, he said the housing market "is more competitive than we've ever seen it." More or less, today's housing market is a speculative frenzy powered by super cheap borrowing rates (thanks Powell) and ultra-low supply.
Fairweather indicates the red hot demand can't continue forever and warns: "we're nearing a peak in terms of how fast demand and prices can grow."
Besides record-low mortgage rates and tight supply, the implosion of liberal cities, spiraling into an epidemic of violence following last year's defund the police movement, resulted in one of the most significant urban exoduses of city dwellers. This has fueled housing markets in suburbs and rural communities, pushing prices up even further.
With builders unable to build fast enough, more and more prospective homebuyers fight over a smaller pie of listed homes. Redfin data shows the average US home is selling above the listing price as a fierce bidding war has ensued in the spring housing market cycle. In areas like Northern California, homes sell for 107% of the asking prices.
Buyers have become desperate and offer to wave inspections, pay seller costs, and throw in extra perks to lock in a deal.
The speculative frenzy has ignited US home prices in 20 major cities, up a shocking 11.10% year-over-year.
This is the fastest YoY rise since March 2014.
Away from the 20 major cities, prices are rising even faster, up 11.22% - the fastest YoY price appreciation since Feb 2006...
Jim Black, a broker who works in Worcester, Massachusetts, told Bloomberg many houses "are selling in a couple of days with multiple offers, sometimes 10% over list price."
"It's as crazy as it has ever been," Black said.
There have been reports of buyers in Atlanta writing personal letters and offering gifts of as much as $2,000 just for accepting their offer, said Andrew Kolodey, a Redfin agent.
Allison Health, a realtor with Baltimore-based Northrop Realty, said the housing market is absolutely on fire, and low inventories in the Baltimore Metropolitan Area have unleashed bidding wars that have resulted in soaring home prices. She said the only way to secure a deal is to put in a contract well above the listing price, offer to pay closing costs and wave inspections.
Readers may recall, one home in Toronto saw 112 showings and received more than 17 offers.
While Redfin's chief economist Fairweather warns the housing market is possibly overheating, there are early indications homebuyer demand could soon be waning. We've seen this story before, and it never ends well.