Demand reaches highest point ever
It seems nothing can stop housing demand, which just hit a new high, according to Redfin, an online real estate brokerage.
The company’s Housing Demand Index increased 11.3% in May to a new record high. The index now stands at a seasonally adjusted level of 136, the highest level of homebuyer demand since Redfin began tracking in January 2013.
The Demand Index is based on thousands of Redfin customers requesting home tours and writing offers. A level of 100 represents the historical average for the three-year period from January 2013 to December 2015.
A recent report from Trulia showed falling inventory is forcing homebuyers to move at the fastest pace ever. Competition is so fierce, in fact, that Redfin reports 33% of Americans, and 41% of Millennials, are buying homes before seeing them in person.
“Housing shortages look to intensify and may well turn into a housing emergency if the discrepancy between housing demand and housing supply widens further,” Lawrence Yun, National Association of Realtors chief economist, said in response to housing starts sinking to an eight-month low.
And because of this increasing competition, many experts say a slowdown in rising home prices is nowhere on the horizon.
And yet, despite these complications, the demand for housing continues to increase. The number of buyers requesting tours from Redfin increased 9% month-over-month in May, and the seasonally adjusted number of buyers writing offers increased 15.4%.
The index showed housing inventory dropped 11.8% in the 15 metros it covers, marking the 24th consecutive month of annual inventory declines. New homes listed for sale actually increased 4.2% in May, meaning people are buying up homes faster than they are being listed.
“On paper, the numbers we’ve been presenting all year make the market look like a seller’s haven,” Redfin Chief Economist Nela Richardson said. “But very often sellers are buyers too.”
“Sellers in hot markets can quickly generate several competing offers, but what they really need to be on their way to their next home purchase is a committed buyer who will make it to the closing table without delays or hassles,” Richardson said. “To provide this assurance, savvy buyers aren’t just offering the highest price; they are using creative strategies like pre-inspections and non-refundable deposits to demonstrate to sellers their commitment to close the deal.”