Buying a home right now means dealing with the reality of a seller’s market, also called a “hot” housing market. This means that there are not enough houses for sale to meet buyers’ demand. This lack of housing inventory leads to high sales prices, and even bidding wars, for the few houses that are on the market.
There are a few things that created the current real estate market. First, the largest demographic in the United States right now are Millennials. This group ranges in age from about 25 to 40, so they are likely to have established careers and are starting families or already have children. In other words, many are ready to either buy their first home or upgrade to something bigger and more family-friendly. The housing demand is not driven entirely by Millenials, but they are definitely having an impact.
The Coronavirus pandemic has also played a part in increased house hunting. Remote work and school led to reexamining priorities for the home. It revealed issues like too little space and distance from loved ones, or that an open concept is not necessarily best for everyone. For some, working from home became permanent, opening up the possibility of living in an entirely new environment without worrying about commuting.
At the same time, the construction industry has slowed, resulting in fewer new homes. This was largely due to breaks in the supply chain and high material costs (which were other effects of the pandemic).
Adding to these market conditions: Americans have more savings than in prior decades, and interest rates have been at all-time lows, making it cheap to borrow. In other words, people have the money to buy homes.
The result? It doesn’t matter if buyers are looking at small starter homes or luxury listings. Demand is high, supply is low, and homes are selling for more than ever.