“When the Epidemic started a year ago, I had a client who bought a house because they were really unsure what kind of changes the epidemic would bring to everyone’s Life, and they were especially worried that the house they bought would drop in price and fall very badly. Now, a year later, the real estate market is so hot that buying a house is basically a rush, but they are very grateful to me and feel lucky that they bought a house first.”
Demand for housing exceeds supply
At a Time when everyone was worried about the U.S. economy being mired in a new pneumonia epidemic, the Federal Reserve and banks were cutting interest rates to record lows, and the new work-from-Home model was causing many people to leave the metropolis and look for larger, more spacious homes in the suburbs, enthusiasm for home ownership was at a record high, keeping real estate agents like Phoebe Lin busy. Real estate agents like Phoebe Lin have been busy.
With demand outstripping supply on the market, bidding wars are everywhere, and adding tens or hundreds of thousands of dollars to the asking price may not be enough to win. According to the latest data from real estate website Redfin, 55.9 percent of their listings continued to face fierce bidding in January, up from 52.5 percent last December, and this is the ninth consecutive month that more than half of Redfin’s listings have faced bidding.
Redfin’s analysis of 24 metro areas found that Salt Lake City, Utah; San Diego, California; and the Bay Area were the most heavily contested. Salt Lake City, which faced bids in January for nine out of every 10 asking prices, ranked first. They were followed by San Diego at 78.9 percent, the Bay Area at 77.1 percent, Denver, Colorado at 73.9 percent, and Seattle, Washington at 73.8 percent.
Offers are higher than asking prices
Charles Wheeler, a real estate agent in San Diego, said the current rush for homes is so intense that almost all homes can be sold within five or six days, and only two days on the weekend can take dozens of guests to see homes, and generally have a dozen offers (offers) right away. “I am telling buyers’ agents to give me the highest and best offer within my ability, because sellers are getting so many offers now that they are usually only considering the top three or four. Don’t expect to be able to bargain now either, if you want to get a house, the offer should be at least higher than the asking price.”
Real estate agent Liao Shuping said that every time a house comes on the market for a showing, there is almost always a long line at the door, even when the weather is cold. (Courtesy of Liao Shuping)
800,000 to 1 million yuan popular
In terms of price, houses between 800,000 yuan and 1 million yuan were the most popular, with a bid rate of more than 65%. The next most popular house was between $1 million and $1.5 million, with a bid rate of 61.1%. In third place were houses between 600,000 yuan and 800,000 yuan, with a bidding rate of 60.9 percent. Even the least sought-after homes under $200,000 had a bid rate of nearly half, 42.5%.
As for house types, the bidding rate for single-Family houses was 58.7% in January, attracting the most bidders. Especially after the outbreak of the epidemic, almost all people work from home, and people need more space for adults to work and children to go to school at home, so single-family houses have become particularly popular. Townhouses came next, with a bid rate of 54.8%, followed by condos with 44.6%.
Daryl Fairweather, chief economist at Redfin, said the number of listings is at an all-time low and could be even lower. “As we look into the spring buying season, more buyers are going to show up, and with so few homes on the market to trade, I think the rush is going to become more and more common. Buyers should prepare well in advance, go to see the house as soon as it is listed, talk to the bank about the loan, also explain their budget and bidding space with the agent, and make a timely offer when they see a house they like.
Chinese homebuyers Chen Zhe and his wife started looking at houses in California last summer, and only in December did they lock in a win, “the original looking around is very time-consuming and energy-consuming, every time they bid is even more torturous, buy a house finally made the whole family physically and mentally exhausted”. He said, because it is the first purchase of the family, at first hold the mentality of comparison, always think more look at a few before deciding, so missed a few listings.
Later, the bottom and the courage are more adequate, began to try to offer, but because of the psychological price difference between the seller and 10,000 or 20,000 yuan, did not negotiate. After gradually expanding the search, I finally found a house that completely satisfied all my fantasies about home, sent photos to both Parents, and the elderly were very satisfied and supportive. “After the resultant offer, the agent told us about 20 buyers were up for grabs.”
The agent had to be fully armed and protected when showing the house to guests.
Weekend anxiety about house viewing
Because the local price of similar houses are mostly in just over 1 million yuan a little, Chen Zhe felt that another 50,000 80,000 can have hope, after all, their own budget is limited, and do not think that other buyers will bid too crazy, “the result is surprisingly hard not to talk, really is someone quoted a higher price!” The day he lost his ideal home, he said, that feeling is like a confession of rejection, the heart will really feel bad, because too much like that suite.
Seeing that fewer and fewer properties are listed and sold faster and faster, coupled with the shadow left by repeated unsuccessful attempts to grab a home, working people like Chen Zhe, who can only look at homes on weekends, are feeling anxious. “So we began to change the strategy, do not wait until the weekend to see, that opportunity is even less, we decided to see as long as the Internet like, the same day on the appointment, the next day to see.”
Until he met the current set again, Chen Zhe realized that he had to make a strong bid, and it was good that the agent understood that only four buyers had offered at that time, “we decided to offer 1.15 million, up to 1.18 million, and luckily managed to break into the top three.” Although other buyers also quoted higher than him, but he had more down payment and stable job, the seller chose to sell the house to him after comprehensive consideration. “Buy a house this way, which the heartache, anxiety is simply unbearable to look back on, but see the price of housing is still rising now, but is very glad that they finally got this thing done.”
Mortgage down the lowest value
Amy Wong, president of the Contemporary Property Group and founder of the Meguiar’s Real Estate Platform, lamented, “The rapidity of change in the real estate market has now made it a bit hard to keep up.” She said that one of the main reasons why there was a fever to buy a house even during the epidemic was that the Federal Reserve cut interest rates and bank lending rates hit a 50-year low on record at only about 2.5%, 2.65% and 2.75%.
To buy a house of 1 million yuan, for example, with a down payment of 200,000 yuan and a loan of 800,000 yuan, “let’s not say that the interest rate difference with the 1980s 18%, 19%, 20% is about ten times, just take 4.15%, 4.25% in 2019 as a reference, buy a house a year apart, you can pay back the bank 150,000 yuan less, and if the loan amount is a little larger, you can even pay back less More than 200,000 yuan.”
Home Office Causes
Another reason is that after the outbreak, people started working from home and no longer needed to work in an office, so commuting was no longer an issue. And because the whole family has to do their work and study at home, they need more space, and densely populated metropolitan areas are not safe, so more people are looking to buy homes in the suburbs and find more indoor and outdoor space. “It’s very common to get one or two dozen offers on a house that’s just been listed.”
During the epidemic, there were also far fewer houses available for trade compared to the past. Huang Li Yan said that many homeowners, especially the elderly, consider the risk of cross-contamination too high when showing their houses to strangers during special times, so they would rather stay unsold first than rush to offer. “Like we take guests to see the house, they have to be fully armed, wear masks, disinfection, keep social distance, good protection measures”, before the appointment to see the house, everyone has to fill out a health questionnaire, in addition to register personal information, but also to list whether they have had symptoms, whether they have been in contact with confirmed patients, have no travel history, etc.
Change in the way of viewing properties
Empty houses where the owner has moved out are relatively better, “but these houses also sell quickly and in a flash.” For houses where the owner is still living, many agents have adopted 3D filming and video display, “which is really a new phenomenon spawned by the epidemic, and many buyers have quoted prices before they can see the houses on the ground”. And today’s technology is so advanced that “it’s even more detailed than going to see it on the ground,” and edges and corners can be searched and played back at any time for buyers to scrutinize.
Liao Shuping, an agent at PARKnSHOP Realty in New York, said that under the epidemic, people are generally particularly sensitive to information, and as soon as there is any change in the environment, people immediately follow the reaction. She is also much busier because of this. On Long Island, for example, every time a house comes on the market for a showing, there are almost always long lines at the door, even when the weather is cold. In the past, a Saturday showing was more than enough to get an appointment a day or two in advance, but now it’s impossible to get an appointment at all.
Cash bids for homes
“Many buyers feel that loan rates are rarely this low, so why not buy? Some sellers would have liked to wait a year or two before selling, but now they see the housing market is so hot, they also simply take it out early to sell.” So whether buying or selling, there was no slowdown during the epidemic. She had a guest, the house went to see the first show on Saturday, two days later on Tuesday morning to buy it at a price increase of more than 40,000 yuan, “all have to use the grab. And in order to grab the house of their choice, some buyers even proposed not to need another home inspection (inspection), and can buy in full cash.
In addition, many people moving before the epidemic are trying to go to the best school district, but now see that the bidding is really fierce, some are also willing to take the second best, the best school district is no longer the primary criteria. Like Long Island, there are six major top school districts, Great Neck (Great Neck), Manhasset (Manhasset), Herricks (Herricks), Roslyn (Roslyn), Jericho (Jericho) and Syosset (Syosset), originally for the crowd to grab the place, “now buyers do not want the best. Now buyers aren’t looking for the best, they think the second best school district is okay, and they’re starting to flock to Plainview-Old Bethpage, East Meadow and other areas”.
Asian buyers strong
Huang Li Yan also said that with the need to buy a house last year more people took the opportunity to finalize the house, the economy restarted, all walks of life gradually resume work, especially has begun to hit the new crown vaccine in batches, some people gradually feel that the metropolis has not so dangerous, began to pay attention to the city’s housing market again. “Like Manhattan, especially Fifth Avenue, Asians are still the strongest buyers, people are still optimistic about the advantages of Manhattan as the center of the world, deeply attracted by the city life, restaurants, bars, museums, etc., and hold considerable expectations for the housing market there.”
However, unlike houses outside the city, which are mostly offered at higher than asking prices, houses in the city are still for sale at reduced prices, “and there are bidding wars going on, only because of the price cuts, so buyers feel they have a good opportunity to compete.” She had a guest just the other day who looked at a two-bath condo in Manhattan that was originally $2.89 million before the epidemic, then dropped in price to $1.98 million and finally sold for $2 million, saving nearly a million dollars.
“Some buyers are still waiting and waiting, thinking that many people may lose their jobs and they will face less competition when they make an offer, which is actually an unreasonable way of thinking”. The epidemic led to the unemployment of mostly low-income people earning less than $70,000 a year, while high-income people were not much affected, except that their workplaces shifted from the city to their homes. There are also some stockholders who have experienced the epidemic and decided to invest the proceeds in real estate, which is more stable than the stock market, and these people will be strong contenders in time.
Luis Torres, an economist at Texas A&M University’s Center for Real Estate Studies who has long tracked the housing market, remains surprised that so many people are grabbing homes in the wake of the epidemic, saying it is “unimaginable that the housing market is still doing so well in the midst of such a major public health crisis and economic setbacks “. Normally, when a new home comes on the market in Dallas (Dallas), it usually sells in about six months, and now it sells in a little more than a month. Because of the oversupply of houses, many builders are building houses in the suburbs where land prices are low, but because the epidemic has also affected the cost and transportation of building materials, they still can’t keep up with the people’s eagerness to buy houses.
However, he believes that this crazy scene should not last long either, as interest rates will gradually rise this year and more properties will be available on the market, prices should eventually come down, thus freeing home buyers from the fierce bidding wars.
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