Spring and summer are always busy times for the real estate market, but this current season is shaping up to be one for the record books: Not only are home prices up across the country, according to data from Zillow, but the month-to-month increases since January have been the biggest that Zillow has ever recorded.
Nationally, the average home price rose 1.3% in April alone, the biggest month-to-month jump in the 25 years that Zillow has been recording that data. For context, home prices rose just shy of 0.5% in April of last year and just over 0.25% in April 2019.
The increase in home prices is even more eye-popping when you consider that home values increased 11.6% nationwide in the last 12 months. In the country's hottest markets like Boise, Austin, and Phoenix, those increases were more than 20%.
In total, 18 metro areas saw home values increase at least 15% from April 2020 to April 2021, according to Zillow data.
Those jumps add up to serious cash: The median home price increased more than $100,000 in Boise in the last 12 months, and it increased almost $90,000 in Austin and more than $60,000 in Phoenix, according to Zillow data.
The yearlong, red-hot housing market has largely been attributed to two factors. New buyers looking to take advantage of record-low interest rates have sent demand soaring, while pandemic uncertainty has brought down supply by depressing the number of homes for sale.
While experts believe more homes will be listed in the coming months, those increases in supply are unlikely to tame prices, says Nicole Bachaud, economic data analyst at Zillow. "This isn't really going to slow down anytime soon," Bachaud says. "More inventory is probably going to come onto the market later this year or early next year, and that might start to moderate price growth. We're not going to see price growth decreasing."
The top-dollar prices that homes are fetching are not the only indicator of just how desperate some buyers are feeling right now. The number of days that homes are on the market has dropped precipitously in recent months.
Almost half of all homes sold in April were under contract within seven days of being listed, according to Zillow. More than three-quarters were under contract in less than a month.
The speed at which these purchases are happening doesn't help the inventory problem, Bachaud says. "That's what's going to keep inventory down," she explains. "We have a lot of homes coming on the market, but they're gone in seven days."
Video by Richard Washington
The seller's market is likely to continue for the remainder of the year, not only because supply is so low, but also because many prospective buyers have the financial bona fides to make a big purchase even as prices rise.
"There's a lot of really strong buyers in this market," Bachaud says. "There are a lot of buyers that are ready to move in this market, and they're moving quickly when they find the house."
While the fundamentals of homebuying, including having good credit and a solid down payment, continue to be key in this ultracompetitive market, here are some tips to make sure that you're one of those strong buyers, according to real estate professionals.
- Get a preapproval letter from your lender. Before you even start looking at houses in a competitive market, get a preapproval letter from your lender that you can whip out if you want to move on a property, said Debra Hall, a real estate agent in Northern Virginia. "A preapproval letter is when you have reached out to a lender," Hall said. "They've checked your credit. They've verified your employment. They've looked at your bank accounts, and they deem you truly qualified to buy a house." Putting in that effort up front can save valuable time, and give you an advantage over other offers.
- Don't forgo the home inspection. The tight housing market has driven some anxious buyers to skip home inspections in order to seal the deal, but that's a very risky move, said Sue Riley, a real estate agent in Northern New Jersey. "You never want to forgo an inspection. Ever," Riley said. "There's a lot of hidden things that can come up, and you don't want to be on the losing end of that."
- Write a note. When you send a personalized letter to the seller introducing yourself, it can create an emotional connection between the two parties, said Leigh Marcus, a real estate agent in Chicago. "When a buyer writes the letter — the kind where the sellers can see who they were when they were buying — that resonates a lot with them," Marcus said. That personal touch could help you outpace the competition.
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