How to Win in a Red-Hot Housing Market
Laura Gross knew that she’d be facing fierce competition this spring when she was getting ready to bid on a four-bedroom house in Troy, Mich., a suburb of Detroit. So she pulled out all the stops: She waived an appraisal contingency, offered $30,000 above the home’s $285,000 list price, wrote a letter expressing why she loved the home (it reminded her of the house she grew up in a mile away), and offered the seller a free 60-day rent-back.
The seller chose Gross’s offer over seven others. “I knew I had to offer above list price and waive contingencies to even have my offer considered in this market,” says Gross, an accounting manager at a manufacturing company.
Gross is just one in a tsunami of house hunters who have flooded the housing market since the coronavirus pandemic began. She experienced firsthand how tough today’s housing market is for buyers.
The U.S. is facing a nationwide housing shortage amid strong demand, fueled partly by super-low mortgage rates. “Homes are getting snatched up because there’s simply not enough supply,” says Jeff Tucker, senior economist at Zillow, the housing marketplace and data tracker. Unsold inventory sat at a 2.5-month supply in May, according to the National Association of Realtors (six to seven months of supply is considered a balanced market). Properties stayed on the market for just 17 days that month, on average, down from 26 days in May 2020.
New homes are also hard to find, with new-home sales sinking to a seasonally adjusted annual rate of 769,000 in May, down 5.9% from April. “For a while during the pandemic, you couldn’t buy a brand-new house even if you wanted to, because builders had such a severe shortage of labor and
