- A recent report by Redfin that analyzed the 4-week period ending September 6 found that the median price of a home in the US saw its largest percentage increase since 2013.
- Rising prices and low inventory have created highly competitive markets for homebuyers, especially first-time homebuyers.
- This increase is the latest in a string of record highs for median house prices since the summer, meaning buying a house may not be a great deal for everyone right now.
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The typical US house price jumped 13% year-over-year to $319,178 for the four-week period ending September 6, per Redfin. That was the biggest percent jump in seven years, since 2013.
The report, which looked at 434 metro areas, also revealed that active listings were down 28% from the same time last year, meaning tight supply keeps propping prices higher and higher. With rising prices, low inventory, and high demand, markets are becoming highly competitive across the board, especially those in suburb-like areas.
But this isn’t the first time home prices have jumped this year. Back in July, Realtor.com reported that the median home price was up 8.5% year-over-year an all-time high, then up 10.1% in August.
“Rising prices are just one more reason for people to leave expensive urban neighborhoods behind. The sudden rise of remote work has allowed homebuyers who are priced out of one neighborhood to expand their search to more affordable areas. In turn, they are pushing up home prices in those relatively affordable areas, causing more people to look to even more affordable areas, and so on,” Daryl Fairweather, a chief economist at Redfin, was quoted saying in the report.
Remote work is just one of the factors that has fueled buyer demand this summer season. Historically low mortgage rates have also added an extra push to prospective homebuyers. In fact, in July, the average 30-year fixed mortgage rate fell to 2.98%, the lowest-ever recorded percentage by Freddie Mac, dating back to 1971.
However, it’s not smooth sailing for homebuyers, especially for first-time buyers searching for affordability
“Home price growth this high is making the housing market especially difficult for first-time homebuyers right now,” Fairweather was quoted in the report.
Even if price growth begins to cool in 2021, Fairweather said high prices in these desirable local markets will remain.
According to Redfin, 46.4% of homes that went into contract during the four-week period ending September 6 had an accepted offer within two weeks.
Angela Retelny, a broker based in Westchester County, New York, with more than two decades of experience and $350 million in total sales volume, told Business Insider that it’s an unprecedented time in her region, with homes flying off the market and business going through the roof.
“Buyers are feeling the pressure of very little inventory,” she told Business Insider in August. “For example, in Scarsdale, there is practically no inventory. Every house that’s on the market has multiple offers.”
Business Insider’s Taylor Borden reported that, per a LendEDU survey taken in late August, 55% of those who became homeowners amid the pandemic already regret the decision. And, while mortage rates have hit historically low rates this summer, Borden also reported that the Mortgage Bankers Association said mortgage availablity was lessening by late August.
So unless, as Retelny puts it, prospective buyers are ready to go head to head on all-cash offers, blind bids, and offers over the asking price, buying a new place right now may not be in the cards.