2021 starts with low inventory and fierce competition

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Published Date 1/25/2021

As the nation fights a pandemic and everyone wants the word “normal” to return to their lips, another caveat is brewing in the real estate market: buyers beware. According to Realtor Magazine, the biggest challenge that home sellers will face in 2021 is the temptation to overprice their homes due to the hot market conditions.

The combination of the low inventory of homes for sale, low-interest rates, and the pandemic buying frenzy has placed sellers in the driver’s seat, with home prices rising by double-digit percentages annually. Redfin reports these historic bidding wars most prevalent in the Salt Lake City metro, followed by San Diego, San Francisco/San Jose, Seattle, and Denver, but those are no doubt just the tip of the iceberg for what is happening in other popular metro areas.

RealtorMag cites HomeLight’s Top Agent Insights report, conducted in the fourth quarter of 2020, 1,000 real estate professionals’ responses nationwide indicate that 52% believe the biggest challenge that home sellers will face in 2021 is the temptation to overprice their homes, with another 15% saying they were concerned that bidding wars will drive more offers above appraised values in 2021.

“The housing market is unseasonably hot—it’s behaving like it normally does in the spring, with plenty of demand from home buyers,” says Daryl Fairweather, Redfin’s chief economist. “Typically, the vast majority of homes for sale in December are homes that have been sitting on the market because they’re overpriced or there’s a problem with the property. This December, with so many Americans moving, scores of desirable homes hit the market—but not enough to satisfy insatiable demand from homebuyers. The result? Fierce bidding wars.”

As for buyers, 2021 portends a lack of housing options due to low inventories, with many buyers failing to find a home they like; more than half of agents surveyed expressed this as the chief concern among their clients. Another 19% were concerned that their buyer clients will continue to lose out on multiple homes due to bidding wars.

Source: Realtor | TBWS

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