Housing Market Boom May Tempt Sellers to Overprice
Buyers beware: It’s a seller’s market and homeowners are holding firm on the price. More than half—or 52%--of about 1,000 real estate professionals recently surveyed believe the biggest challenge that home sellers will face in 2021 is the temptation to overprice their homes due to the hot market conditions.
The homebuying frenzy since the pandemic, mixed with a low inventory of homes for sale, has placed sellers in the driver’s seat. Home prices have been rising by double-digit percentages annually.
HomeLight’s Top Agent Insights report, conducted in the fourth quarter of 2020, is an online poll reflecting more than 1,000 real estate professionals’ responses nationwide.
Nearly 15% of real estate pros surveyed also said they were concerned that bidding wars will drive more offers above appraised values in 2021.
Bidding wars remain high in many markets, an unseasonable trend for the housing industry. In December 2020, nearly half of real estate professionals with the brokerage Redfin reported facing a bidding war in submitting offers for their clients.
“The housing market is unseasonably hot—it’s behaving like it normally does in the spring, with plenty of demand from home buyers,” says Daryl Fairweather, Redfin’s chief economist. “Typically, the vast majority of homes for sale in December are homes that have been sitting on the market because they’re overpriced or there’s a problem with the property. This December, with so many Americans moving, scores of desirable homes hit the market—but not enough to satisfy insatiable demand from homebuyers. The result? Fierce bidding wars.”
Redfin’s survey showed bidding wars were most prevalent in the Salt Lake City metro (75.6% of Redfin offers faced competition there), followed by San Diego (at 74.5%); San Francisco/San Jose, Calif. (67.4%); Seattle (65.3%); and Denver (58.4).
Meanwhile, the biggest challenges likely to face home buyers in 2021 are the lack of housing options due to low inventories and the inability to find a home they like; 51.4% of agents expressed this as the chief concern among their clients. Nearly 19% of real estate pros also were concerned that their buyer clients will continue to lose out on multiple homes due to bidding wars. Eleven percent of agents also clients were challenged to find an affordable home due to rapid price growth.
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Source: “Top Agent Insights Q4 2020 Report,” HomeLight (2021), “Half of Redfin Home Offers Faced Bidding Wars in December as Housing Market Defied Holiday Slump,” Redfin (Jan. 15, 2021) and Realtor Magazine
"Copyright NATIONAL ASSOCIATION OF REALTORS®. Reprinted with permission."