By Charity Ohlund, Director of Marketing
No, you’re not imagining it. Home prices have skyrocketed in the past year, and data from Redfin backs up what buyers, sellers, and real estate agents have already known for months. The national home price average rose 14.4 percent year-over-year to $336,200 in February. This is the largest increase since July 2013. It is also the strongest purchase market since 2006.
With low inventory and the high cost of building materials, new listings fell 16 percent in February – a time when people would traditionally be listing their homes for a spring sale. The shortage of homes is making for fierce competition among buyers. Nearly 36% of all homes sold last month went above asking price.
Mortgage rates have also jumped up a bit to just north of 3. But rates should steady out and will likely end 2021 around 3.5%.
So, are we in a bubble?
Redfin’s Chief Economist Daryl Fairweather says no. He expects demand to settle down as rates rise. But the continued vaccine rollout and stimulus money could keep demand high for a while longer.
“Yes, some buyers are overpaying for homes, particularly those who are moving to affordable destinations and paying well over asking prices to win homes in bidding wars,” Fairweather says. “But these buyers are often covering any shortfall in the bank’s appraisal amount and locking in low monthly mortgage payments that they can easily afford.”
If you’d like to find out how much home you can afford and how to be competitive in today’s buying market, please reach out to one of our team members for a consultation.
This weekly Sponsored Column is written by the employees of Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268