A March 2018 housing trends report released by realtor.com, the official site of the National Association of Realtors, shows the U.S. median listing price jumped 8 percent year-over-year to $280,000 last month. Compared to last year, days on market dropped 7 percent to 63 days and total listings dropped 8 percent. To compensate for rising prices and interest rates, buyers, particularly millennials, are employing strategies and adjusting their home search.
"Our latest inventory data tells us buyers are out in full force this spring. Never in history have there been more eyes on fewer homes than today," said Javier Vivas, director of economic research for realtor.com. "At the end of March, we observed price gains that put us on pace for half of the homes listed this summer to be above $300,000. Buyers are not just paying more for the same home; the mix of homes in the market is rapidly changing."
Vivas indicated the addition of new listings above $350,000 is good, but inventory between $200,000 and $350,000 remains anemic and under $200,000 non-existent. He noted, "This bodes well for buyers in the upper and luxury tiers, but paints a darker picture for the entry-level market."
An online survey of more than 1,000 active buyers conducted in early March by Toluna Research found a large portion of this spring's demand is being driven by "buyer holdovers" from last summer and beyond. Forty percent have been searching for more than seven months, 34 percent have been searching for four to six months, and slightly more than a quarter (26 percent) have been in the market three months or less.
This spring, buyers appear determined to rise to the competition by approaching the market strategically. When asked about strategies they are using in their home search, 42 percent said they are checking listing websites every day; 40 percent plan to put more than 20 percent cash down; 33 percent are setting price alerts; 31 percent plan to put a larger earnest money deposit down; and 26 percent are willing to offer above asking price. Only 6 percent indicated they are not planning to use any tactics to cope with competition.
When asked how their search would be impacted by rising prices, 41 percent said they have to buy a smaller home; 35 percent need to look for a less expensive home; 34 percent have to look in a different neighborhood; 33 percent need to put down a larger down payment; and 31 percent have to increase their monthly mortgage budget.
"In this tough market, the key is just to get in at a price and monthly mortgage payment you are comfortable with. Once you're in and have a home, everything will fall in place," said Bill Moody, president of the Silicon Valley Association of Realtors.
Millennials appear more impacted by rising rates than other groups because they carry more debt. The survey reveals among those between ages 18 and 34 years old, 78 percent have credit card debt; 68 percent, car loan; 62 percent, personal loan; 62 percent, mortgage debt; 57 percent, home equity loans; and 61 percent, student loans.
This is notably higher than 35-54 year olds who reported 72 percent, credit card debt; 59 percent, car loan; 55 percent, personal loan; 60 percent, mortgage debt; 49 percent, home equity loan; and 49 percent, student loans.
Among those 55 and older, 45 percent indicated credit card debt; 30 percent, car loan; 12 percent, personal loan; 32 percent, mortgage debt; 11 percent, home equity loans; and 9 percent, student loans.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
Variations of this article have appeared in local area newspapers.
For further information, please email or call the SILVAR office at (408) 200-0100.