Housing set a lot of records last year. But one of the most shocking? That'd be the average 15-day selling time most properties saw, according to Redfin.
It's basically unheard of. Just five years ago, it took around 60 days, on average, to sell a house. Now? It's merely a fraction of that.
There are a lot of reasons for this uber-competitive market -- including record-low inventory, surging demand, and a rising share of investor home purchases. Whatever the driver, though, it poses a serious conundrum for buyers, driving up prices and making finding a place -- not to mention affording one -- infinitely more difficult.
Are you considering investing in real estate this year? If so, you may face similar headwinds. Here's what to expect -- and how to come out on top.
Image source: Getty Images.
Record selling times in 2022?
Mortgage rates are much higher than in 2021 (the average 30-year loan rate is now 3.55% -- up from 2.73% a year ago), which has many buyers pulling back from the market. According to the latest data from the Mortgage Bankers Association, applications to purchase a home were down this week and have now decreased about 11% (unadjusted) from this time last year.
It's good news for buyers, but even if that trend were to continue, we'd still have a major supply deficit. According to Freddie Mac, the market's about 4 million homes short of demand, and while construction has increased lately, that's not something we'll overcome easily -- nor quickly. In fact, just this week, Realtor.com reported that active inventory is down 28% year over year. And selling times? Those were 10 days faster.
While there's no telling if this will be the norm for all of 2022, it seems likely. Unless there's a huge slip in demand or some sort of massive supply infusion, we're probably going to see lightning-fast selling times for most of the foreseeable future.
How to win out when competition is stiff
If selling times remain this tight, the best thing you can do as a buyer is act quickly. Know your budget, have your preapproval letter ready, and set up listing alerts so you can schedule a showing as soon as a house for sale goes live.
You should also consider using an agent that offers virtual tours. That way, if you're at work or away for a bit, they can still show you homes at the drop of a dime -- even if you can't physically be on the property.
To give yourself the best shot at success, you can also:
- Get a fully underwritten approval. These offer faster closings and can give sellers more confidence in your offers. They can also be helpful if you're up against a bunch of other bids.
- Offer all cash if possible. Cash is king, as they say -- and that's especially true in real estate. In fact, an analysis from Redfin actually shows cash offers increase your chance of winning a home by 290%. If you don't have the funds for such a move, companies like Orchard or Ribbon can make cash offers on your behalf.
- Offer a lease-back. Chances are, most sellers aren't ready to move in a mere 15 days. Many might not have a new property lined up, or they could be waiting on their loan to close. Either way, offering a lease-back, which allows them to rent the home back from you for a short period of time, can be a good way to win their favor.
Keep in mind that housing conditions vary from one market to the next, so link up with an experienced agent in your area for the best advice in your specific market. And most importantly? Make sure they have the bandwidth for you. You need someone who can act quickly -- before that dream home gets snapped up by other bidders.
