Pandemic Rebound Creates Bidding Wars in Housing
According to housing data in the US from the first weeks of May, 2020, over 41% of homes being sold actually faced a bidding war. These numbers were released by Redfin, and show a 9% increase from January, and a huge increase from February, March and April, months where the virus pandemic had slowed the housing market down to a crawl.
Simply put, this means that people in the market for homes are having to buy from a lesser supply. In order to understand this, imagine that your local grocery store only had a few essential items, and consider how people may be willing to pay more for them. This is something we actually recently witnessed with toilet paper. It has been reported that some stores were charging up to four times more for toilet paper, due to limited supply, and people were happily paying.
With most US states having a “shelter at home” lock-down order still in effect, it means that far fewer people are putting their houses on the market to sell them. Though this hasn’t stopped some people from wanting to buy a new home. Though when they go looking for homes to buy, they’re drawing from a pool that’s far thinner than how things were at the start of the year. This has caused a four-fold increase in terms of buyers trying to out-bid one another for the home.
Overall, new listings were down by 29% from last year, measured on May 9, and it’s actually an increase from the number of listings from April. This means roughly a third of houses typically found by perspective buyers just aren’t being found at all. Buyers are out there trying to move into homes, but the homes are not there.
Buyers are starting to return to the market in a hurry to catch up on their moves. For many people seeking a new home, they had a move planned earlier in the year, yet they were placed on hold due to the Coronavirus. For a lot of households, they received a few thousand dollars from the stimulus spending, and this put them over the top in terms of down payments or other expenses they needed to move. Though on the flip side of that coin, a lot of people who were in need of selling their home actually got back in the black with the stimulus spending and no longer had to plan a move. So it’s really hard to quantify which end of the spectrum was the most affected by this virus and the government’s spending measures.
Why the Market Rebounded
Many experts had long predicted a vibrant rebound in the US housing market. From early 2017 until March of this year, the American economy was stronger than it had been in decades. Whether one wishes to credit President Trump for this, or if someone may want to claim it’s a rollover from President Obama, or perhaps just a fluke, the fact is that America’s economy has been running strong for three consecutive years, most notably its housing market. So, many experts suggested that this virus pandemic, while seemingly dangerous and widespread, was actually only a hiccup.
All we can say for sure is that when certain states started to loosen their lock-down restrictions, people started looking for homes. We can see the real estate graph spike in a big way in a state like Georgia, who stopped their lock-down measures at the beginning of May. While many predicted a huge virus spike, Georgia’s proportionality of infected has not increased since getting rid of the lock-down. This has enabled the state’s residents to at least attempt to get back to life as usual, and this includes buying and selling homes. Unfortunately, there aren’t as many sellers yet as buyer’s, which definitely makes it a seller’s market, for anyone considering listing their home.
Another reason here is that people were cooped up and had a long time to plan something different in their lives. The psychological aspects of this virus, at least when told to us by the so-called experts, always focused on the doom and gloom. They always mentioned depression and anger and sadness, never dealing with the possibility that some people may simply have taken the opportunity to plan big changes in their lives. So we’re witnessing a lot more people wanting new homes than wanting to sell existing ones.
This is good news for America’s housing market, and the selling end is expected to rebound in coming months.
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