The name of the game is: More Bidding Wars!
Well we have a month’s worth of new data and the message is: A strong sellers market driven by limited inventory that I’ve been reporting on for a long while has reached DEFCON 1. On Friday we ran the numbers and we were down to 1,745 homes on the market in the Northern Virginia region. That’s down 10% from last year. Yesterday we were at 1,469!! Only 155 of those are TH’s and 529 are SF’s.
It’s typical to have 10 or more contracts on new listings of TH’s and SF homes and the winning offers are typically 5% to 10% above list price. Buyers are waiving inspections, appraisals and financing all over the place. It’s not a comfortable place to be as a purchaser. The good news is that it’s not just the highest offer that wins and there are things I am doing to position my clients to win these competitions without giving up the farm. Reach out to me if you are in the market to purchase or move up or down and I’ll go over what we can do as a team to help you come out on top. On the sellers side you need to do less to prep your home for sale and market timing is nearly irrelevant so if you are thinking of selling reach out to me. Your assumptions about house prep and timing may be inaccurate.
Let’s get into some of the numbers for you wonks out there. One of the reasons that inventory is so low is that the pace of sales is up 23% over last year, pandemic be damned! Closings are up 37%. This translates to a .7 (point 7) months supply of houses for sale. Rentals are worse at .5 months supply. Depending on the area prices are up over 10% and climbing. On the new construction front materials costs going through the roof coupled with increased demand raised prices a staggering 18.8% last year.
All of that segues into my regular commentary about distress sales. There are only 8 foreclosures and 4 shorts sales on the market (compared to 35 and 21 last year). Rising prices (and thus equity positions) coupled with the extended forbearance programs will make those nearly non-existent for the next several quarters at least. Where the cracks will emerge in this first I believe is in the small investor market, landlords who own just a couple of investment properties where the tenants are delinquent. The average delinquent tenant is 4 months or $5,600 a month in arrears. If you are a landlord with 3 properties and two are in that situation you could be in trouble.
On the mortgage and interest rate fronts the Fed met last week and in the most unequivocal terms they can typically muster stated that they have no plans to push up interest rates, which is good news. There is a much higher scrutiny of self employed borrowers due to the pandemic so if you are in that situation be prepared for a more complicated and documentation heavy mortgage process.
So an outstanding time to sell, a challenging yet still excellent time to buy, and continued market strength.
It’s a good life.