The tough housing market just keeps on getting tougher.
By Margaret Heidenry
The number of homes listed for sale took a nosedive in January, falling 28.4% compared with a year earlier, according to a recent Realtor.com® report. And if that sounds bad, consider that two years ago—in pre-COVID-19 times—the number of active listings was a whopping 60% higher than it is today.
Granted, December and January are traditionally slow months, with many sellers waiting for spring’s warmer weather to put their property on the market. But so far, early 2022 is looking significantly worse than the usual winter slump, with the number of new listings dipping 9.1% from a year earlier and down a full 16.8% compared with pre-pandemic years spanning 2017 to 2020.
Why home sellers aren’t selling
So why aren’t home sellers selling, given those that do stand to make a tidy profit today? Nationwide, the median home price has climbed to an eye-watering $375,000, a price hike of 25% from a year earlier.
Nonetheless, the fact that home sellers today can make a killing isn’t persuading many to budge, perhaps because once they sell, the question remains: Where will they live? Most sellers, after all, are also buyers.
“In a recent survey we conducted, more than 1 in 4 potential sellers who were choosing not to sell in the near term said it was because they couldn’t find a home they wanted in their price range,” says Realtor.com Chief Economist Danielle Hale. “With housing costs rising, as home prices and mortgage rates both increase, affordability is more important than ever to households. Data suggests that this may be as true for sellers, many of whom will also purchase a new home, as it is for homebuyers.”
Why homebuyers are rushing to close the deal
Despite a limited selection, homebuyers are snapping up whatever they can find—and they’re doing it fast. In January, homes sold in an average of 61 days, down 10 days from last year and 24 days from January 2020.
One reason home shoppers are closing deals nearly an entire month faster may be the rush to take advantage of record-low mortgage rates before the Federal Reserve raises interest rates, which could happen as early as March. Rates for a 30-year fixed-rate loan were 3.55% on Friday, according to Freddie Mac.
Facing a shortage of available homes for sale, some homebuyers are also resorting to paying more money for less house. In January, the median listing price per square foot shot up by 13.5% year over year, with the median cost of a 2,000-square-foot, single-family home rising 18.6%.
Cities where homes are selling fast
Some cities and their surrounding suburbs are feeling the housing crunch more than others. Florida led the charge, with homes getting snapped up in 29 fewer days in Miami and 24 fewer days in Orlando, both compared with a year earlier. Raleigh, NC, came in third, with homes spending 17 fewer days on the market.
“In Raleigh, all signs point to a growing market where the supply of housing isn’t keeping up with demand,” says Hale. “Data suggests that Raleigh has attracted a lot of interest from big-city households looking for affordability who are able to relocate … thanks to workplace flexibility that has outlasted the pandemic.”
Indeed, a growing number of homebuyers are on the move. In the fourth quarter of 2021, more than 50% of the views on homes for sale in Raleigh; Nashville, TN; and Virginia Beach, VA, came from people living somewhere else, says Hale.
“Each of these areas is growing and seeing a lot of interest from incoming home shoppers,” adds Hale. “All of this interest can lead to fast-growing prices that sometimes paradoxically cause existing owners to hesitate to sell.”
Courtesy Margaret Heidenry is a writer living in Brooklyn, NY. Her work has appeared in the New York Times Magazine, Vanity Fair, and Boston Magazine.