There's been no shortage of excitement in real estate over the past year. Housing prices have been soaring. Americans have moved all over the map. Existing home sales in 2020 reached their highest point since 2006. And there seems to be no slowdown in sight.
As daunting as it can seem to compete for a home in such a crowded market, it can help to understand some of the underlying trends. Here are five noteworthy numbers to be aware of.
The sheer number of people who migrated within the U.S. last year explains in part why the housing market is so hot. Nearly 9 million Americans relocated in 2020, according to the National Association of Realtors. That was an increase of 94,000 moves compared to 2019. While not everyone moving is buying or selling a home, that still represents a lot of properties changing hands.
More people are packing to make a move this year, too. Redfin found recently that a record 31% of its users looked to relocate during January and February of this year, up from 26.1% a year ago.
While the ability to work remotely from anywhere has encouraged some of the moves, there are other driving factors. The pandemic has put some people in a financial position where they need to downsize or move earlier than planned. Other Americans are simply looking for more space, whether that was extra room to learn and work from home or access to the outdoors.
If you're planning to move to a new area, look at the full picture. Check that you can keep your job or a steady stream of income, for example. And before you do anything, "make sure you will be happy," says Connor Brown, founder of After School Finance. "Whether you have friends and family there, understand your motives for moving."
Would-be buyers often need to move quickly, thanks to a number of intersecting trends. To start, there are fewer homes on the market. Realtor.com data points to just shy of 500,000 active listings across the U.S. as of mid-May, 53% fewer than a year ago.
Higher demand and lower inventory has meant homes sell faster, and often at a premium: The average house stays on the market for 43 days, per Realtor.com, a 31% year-over-year drop.
Last fall, Zillow found that homes were selling in five days or less in the hottest markets, including Columbus, Cincinnati, Kansas City, and Indianapolis.
A Grow analysis of Zillow data found that in other markets, including Rochester, NY, San Francisco, and Spokane, WA, more than 40% of homes were selling for more than their original asking price.
Video by Helen Zhao
The median sale price for single-family existing homes hit a record $329,100 in March, NAR data shows. That's up more than 17% since last year.
A bigger price tag can mean a bigger down payment. Putting the traditional 20% down on a median-priced home would cost you about $65,800, compared to about $60,526 last March. Saving that much can be a challenge, especially since 9 in 10 respondents in a November 2020 Point2 poll said they had "significantly less" in savings than the average national down payment amount of $62,600.
"Saving for a down payment is usually the biggest impediment for first-time homebuyers," real estate agent Steven Gottlieb of Warburg Realty recently told Grow. "Housing costs have grown out of proportion compared with decades ago, so the cost [of] a basic home eats up a higher ratio of monthly income than it ever did. With higher living costs, it's tougher to save."
Although the full 20% up front is considered the gold standard, it's not always required. Many institutions allow consumers to pay a smaller initial amount. The median down payment was about 8% in the fourth quarter of 2020, ATTOM Data Solutions shows. Some federally backed mortgages require only 3.5%, and in select instances, homebuyers can put nothing down at all.
Video by Richard Washington
With fewer listings and faster sales, buyers are going to greater lengths to compete. Almost two-thirds, 63%, of those who bought a home last year placed an offer without ever seeing the property, according to Redfin. That's up from 32% who did so in 2019, and the highest share since 2015.
Part of that increase likely stems from the pandemic restrictions that limited in-person viewings. But partly it indicates that a lot of buyers are so enthusiastic, or anxious, to secure a property that they're willing to make an offer on a home without first walking through it.
Buying sight unseen is a risk, experts say. Although you may close a deal more quickly by opting not to see the place in person, "it's in the buyer's best interest to see the home," Francesca Ortegren, a data scientist at Clever, told Grow. "Photos and even virtual tours can give you some information about the place — layout, flooring, etc. — but they don't tell the whole story."
Skipping out on a home inspection is something real estate agents warn against, yet more buyers are doing it. Since the start of the pandemic, 17.6% of successful offers have waived inspection contingencies, according to a Redfin report, versus 6.1% before the pandemic.
Inspections serve as a line of defense between buyers and potential problems with the home. An expert examination can flag expensive issues and allow you to back out of the deal, whereas opting out could cost you money. "You never want to forgo an inspection," Sue Riley, a real estate agent in New Jersey, told Grow. "There's a lot of hidden things that can come up, and you don't want to be on the losing end of that.
Video by Jason Armesto
Whether it's pricey repairs, a big down payment, or endless closing costs, it can be hard to take control of your home purchase without doing your homework and being prepared.
"Focus on saving as much as possible so that when you are ready to move, you don't have to go into debt to cover the costs," says Allison Baggerly, founder of Inspired Budget. Take a comprehensive approach, she adds: "You'll want a good idea of how much money you'll be spending. This will allow you to make a decision based on numbers and your finances."
More from Grow:
- About 330,000 Americans moved to Florida in the past year: Here's how much it costs to live there
- The top 3 U.S. cities where homeowners borrow more than they can afford to pay
- 47% of millennials call this their No. 1 homebuying fear