In what appears to be a continuation of an extraordinary pandemic-defying trend, home prices are continuing to rise amid an economic climate still full of uncertainty – but a majority of homeowners who are holding off selling.
If you want to know how to buy a house this year, you might want to focus more on where you'll be able to find a house to buy given the now serious shortage of new listings.
Home values were up 15 per cent year over year as of the end of the first week of February, according to the most recent report by Redfin. If you want to make a profit on a house sale, now is surely a time to take advantage of an extraordinarily busy housing market. So, why is seller confidence so slow to return, and why are new for sale listings consistently down in the new year (a very worrying 37 per cent decrease year over year in February so far)?
The answer to this question is simple and brutal: current homeowners don't want to sell partly out of fear of not being able to buy again in their area. Competition is so high that many simply don't want to put themselves through the stress of looking for a home within their price range and moving out of their current one in time if they sell in the meantime.
'There is a serious lack of new listings, and although prices are through the roof, homeowners are reluctant to sell, because it’s so hard to buy again unless you are moving to a less expensive area where you can afford to outbid other buyers,' said Redfin chief economist Daryl Fairweather.
In fact, many of those homeowners who have opted to sell but 'are concerned about finding their next home are asking buyers for a rent-back agreement, which allows the seller to stay in the home until they can move into their next one.'
If you are flexible about moving dates and are able to offer this option to a seller, you have an advantage over other buyers and should make this clear to the seller.
'Offering a rent-back agreement can also be a winning strategy', explains Daryl. This is also a much safer way to compromise with a seller than waiving essential contingencies. At the moment, flexibility around time is worth a lot – but will typically only cost you a few more months of renting. With a third of rental listings currently offering concessions, many renters will be able to afford to wait for their seller to move.
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Anna K. Cottrell is now a freelance writer, having previously been a Content Editor for Future's homes titles. She writes about interior design, property, and gardening. On H&G, she specialized in writing about property – buying, selling, renting – sustainability and eco issues.
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