Planning a home purchase in the near future? Gear up for some heavy competition. According to the latest data, the housing market's competitive -- like, dog-eat-dog competitive -- and it could mean an uphill battle finding that next property (especially at an affordable price).
It's even true for distressed properties, which are typically a bit easier to come by.
Are you on the hunt for your next home or investment property? Here's what you need to know.
Bidding wars are the norm
Real estate brokerage Redfin (NASDAQ: RDFN) reported a whopping 56% of its offers faced bidding wars in January -- the ninth-straight month for a 50%-plus bidding war rate. The competition was stiffest in Salt Lake City, where 90% of all offers were met with bidding wars. San Diego, San Francisco Bay area, Denver, and Seattle rounded out the top five most competitive markets.
Homes are moving fast
All this competition has homes selling at record-breaking speeds. According to Redfin data, 55% of homes were under contract within two weeks, and 43% were under contract in just one week. Average time on market shrunk, too. For the week ending Feb. 27, homes sold six days faster than a year prior, according to Realtor.com.
Foreclosures are in high demand
With foreclosure moratoriums in place, distressed property inventory is at all-time lows, and it's driving up competition for the few properties out there. According to Auction.com, the average foreclosure is getting around 12 bids -- up from just 8.3 a year ago. Bids saw the biggest increases in New Mexico, California, Maryland, New Jersey, and New York.
Supply is extremely limited
Supply constraints are at the heart of all the conditions noted above. According to Census data, there's just a 4-month supply of homes on the market -- up from its trough a few months ago, but still one of the lowest points for inventory in the last decade. Though many had hoped vaccine distribution would get more sellers in the game, that hasn't happened just yet. Realtor.com has new listings down 10.2% over the year for January.
The bottom line
It's a dog-eat-dog market out there, so if you're planning to buy a new property, make sure you're ready. If you're financing the purchase, get preapproved for your loan before putting in a bid. You should also consider removing a contingency or two or, if you can manage it, opt for an all-cash offer to get the upper hand.
Finally, make sure you have a good real estate agent in your corner. They can help you spot listings and get offers in quickly -- and speed is of the essence in a market like today's.