The coronavirus lockdown has stagnated the economy, but the homebuying market is so competitive that buyers are actually facing bidding wars in certain markets.
Some 41.4% of Redfin offers faced competition in the four weeks ending May 10, according to a recent Redfin report.
“You have Seattle, Washington, DC, Boston, unbelievably, having bidding wars. Hey, how's that happening in this market?” said Barbara Corcoran, host of ABC’s Shark Tank and founder of New York City residential brokerage the Corcoran Group.
Competition is especially tight in San Francisco, Fort Worth and Boston, where more than 60% of buyers faced bidding wars, according to the report. Corcoran said lockdown restrictions are less strict in those locations, so homebuyers have been able to get inside homes for tours and inspections.
“Those are actually the states where it's easy to see a home,” said Corcoran. “But as you look at the states where it's very difficult to show, difficult to do inspections, title searches, there's still so much obstruction between the buyer and the house that you don't see those same numbers.”
Locations that are still on lockdown will only boost competition across the U.S. in the coming weeks, said Corcoran.
“Those Redfin numbers are just the tip of the iceberg. But in those homes that are still locked away from the buyers, you're going to see actually a quicker rise in prices when you have that explosion of those frantic buyers coming through the gate,” said Corcoran.
Prior to the pandemic, demand outpaced supply, driving up home prices, especially for starter homes or lower-end housing.
“Well, before the pandemic hit, the first-time buyer market anywhere in the country was the hottest sector of the market. There were just not enough houses to go around. And that was before half the houses were removed from the market,” said Corcoran. “Home buying, for the first-time buyer, is the hottest sector of the market because of low interest rates. It was before the pandemic. And it's going to come back better than any other end of the market.”
The lockdown caused sellers to pull their houses from the market and created pent-up demand among buyers — so bidding wars could get even worse.
“If you really want to get in there, I would say start putting your bids in right now. You're crazy not to be out there,” Corcoran told Yahoo Finance. “You know, I'm going to not laugh at you, but I'm going to say I told you so. Get out there now and put a bid in before the crowd is also doing the same thing.”
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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