HOME BUYERS GROWING INCREASINGLY DESPERATE AS INVENTORY WHITTLES AWAY
A growing number of home shoppers are becoming so frustrated with today’s seller’s market that they’re making more aggressive moves in order to find a property that meets their requirements.
In many cases, a rising number of buyers are rushing into make offers sight unseen. They’re also often bidding well above the asking price and in some cases even waving a home inspection in order to grab the attention of sellers.
“For home buyers, this is shaping up to be one of the most difficult years in recent memory,” Ralph McLaughlin, chief economist of Veritas Urbis Economics, a firm that researches the housing market, told CNBC.
The problem is that record-low home inventories mean that prices across the country are soaring higher. The most striking example of this upwards price momentum can be seen in San Francisco, where prices have risen by an average of $100,000 in the first quarter of this year.
Of course that’s great news for those who’re selling, as they should be able to make a handsome profit on their home. “It’s going to have the feel of a hot market” with multiple offers and bidding wars, said Lawrence Yun, the chief economist for the National Association of Realtors.
San Francisco isn’t the only city to see home prices booming. Hot markets including Seattle, Las Vegas and San Jose have been joined by cities such as Kansas City, Nashville and Salt Lake City in posting double digit gains this year.
The reason is that there are too many buyers chasing too few homes. In February, the NAR reported a 3.4 month supply of existing homes nationwide, which is the lowest ever on record for that month and well below the six-month supply that indicates a healthy market, according to the NAR.
The problem is exacerbated by a slow down in newly built homes, which are down 14.2 percent in the first quarter compared to a year before, Trulia said.
With such low inventory and even with a growing number of sight unseen offers taking place, Yun said that home sales are unlikely to grow this year.
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