MAY 3, 2023
In early April, Atlanta-based realtor Zak Elfenbein listed two newly renovated homes, nestled in a quiet suburb in Douglasville, Ga.
He wasn’t sure what to expect. The homes were 25 miles west of Atlanta, and were being sold by home flippers. Mortgage rates were above 6%, and home prices were high. But there was a noticeable lack of homes for sale coming on the market.
Elfenbein ended up showing the houses 88 times, and he had 12 offers.
“I didn’t expect to have that many notifications for request of showings,” Elfenbein, who represents home sellers, told MarketWatch. “I didn’t even have my sign in the ground when people started requesting showings.”
Neither of the new homeowners were investors. They were first-time home buyers who were using Federal Housing Administration or Veterans Affairs loans. The homes were sold in the $300,000 to $350,000 range, Elfenbein said.
A third home may not even make it to the market because as soon as Elfenbein put the dumpster out front, he said, prospective buyers started approaching him. The client and the agent are still debating whether to list the home, or work with the buyer directly.
It’s not just in Atlanta — across many parts of the country, the lack of supply has been a major issue. Few homes are being listed for sale. New listings in late April were down 21% compared to a year ago, according to Realtor.com. One reason for the fall in new listings: homeowners don’t see a benefit in selling their homes and giving up the ultra-low mortgage rate they secured during the pandemic.
Consequently, bidding wars are back. According to data from John Burns Research and Consulting’s monthly resale agent survey, in March 2023, 41% of previously owned homes saw multiple offers, up from just 16% in November 2022, when the 30-year mortgage rate exceeded 7%.
“Multiple bids are on the rise again because buyers are back to looking in the resale market, but many sellers are reluctant to list,” Jody Kahn, senior vice president of research at John Burns, told MarketWatch. “This demand-supply imbalance is behind the ramp up of multiple bids.”
One agent from Portland, Maine, said in the John Burns’ survey that potential home sellers won’t budge because they are scared they will not find anything to buy.
“I have been a full-time agent for 36 years,” another agent from Philadelphia said. “The market is nuts. Multiple offers on anything that is priced where it should be.”
To be clear, the housing market is not back at the red-hot pandemic-era feverishness. In March 2022, 72% of previously owned homes saw multiple offers, still far above the current 41% rate, John Burns said.
Supply crunch in Atlanta
Yet the supply crunch is still felt deeply in Atlanta, where homes are getting more expensive. Michael Fischer, the president of the Atlanta Realtors Association, said that competition has intensified as “extremely low inventory” pressures home prices upwards. Home prices in Atlanta were up from last year by 1.7%, rising from last March to $397,000 this year, his organization said.
And part of that crunch is due to investors dominating the market, particularly in this region. In Atlanta, around 27,000 single-family homes are owned by investors, according to research by Desiree Fields, assistant professor at the University of California-Berkeley.
Elfenbein said most of his clients are investors, including some from overseas. Investors were keen on buying homes below $500,000, he noted.
Kahn added that agents were so frustrated with their buyers losing out that some were bringing potential buyers straight to new-home communities, “where the buyers stand a chance of getting a home after losing several bids.”
Meanwhile, new homes are gaining market share in terms of housing sales.
“Currently, one-third of the housing inventory is new construction, compared to the historical norms of a little more than 10%,” Robert Dietz, chief economist at the NAHB, said in April.
Courtesy/Source: MarketWatch
