Sales of existing homes increased 7% from August to September of this year, according to the National Association of Realtors. And from last year, the inventory of unsold homes decreased 13%. In other words, the housing market is still hot.
The coronavirus pandemic caused many Americans to spend a lot more time in their homes. This resulted in some people wanting to upgrade their space or move to a city they've always wanted to live in now that they can work remotely.
"Right now, people are paying over asking price just to get a house," says Jeff Cochran, a partner at the Shapiro Negotiations Institute.
If you absolutely need to relocate, there are ways to pad a lower bid with other incentives for the seller and hopefully land the home you've got your eye on at a reasonable price. However, if you don't need to move right now, you might want to hold off, says Ivy Zelman, CEO of housing research firm Zelman & Associates.
"If you don't have to buy, then wait," she says. "I would definitely says it's a seller's market."
The median sale price of existing homes is $352,800, 13.3% higher than it was last year, according to the NAR. The average time a house is staying on the market is less than it was last year, too, Cochran adds. "In today's housing markets, typically a home spends 43 days on the market, seven days less than last year."
This might force you to overpay for a home, Zelman says. "Because it's such a strong market, you have to be really careful," she says. "I would not be buying a home above appraised value."
Paying over the appraised value for a house can be bad for your pocketbook, and it can be a bad long-term investment, too. Usually, a home's value increases between 3.5% and 3.8% per year — in 2021, though, it's the highest it's been since 2006. "Home price appreciation is not sustainable at these levels," she says.
Another good reason to wait: Buyers may soon not be at a disadvantage, Zelman says. Developers in some states are building more and more homes, she says, and eventually there are likely to be more homes than buyers.
"I would say over the next 12 to 18 months, we are going to start to see the market starting to show more moderation and more cooling, and you will be more likely to be in a more balanced buyer's market," she says.
Her best advice is to wait it out: "The housing market is going to run out of steam."
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