These days, buyers are having to come up with more and more creative ways to win the bidding wars that are breaking out again in the Washington area real estate market.
“Multiple contracts have been popping up the last [several] months as the inventory shrinks in the marketplace and there’s more competition for getting a house,” said Holly Worthington, a Long & Foster managing broker in the Washington area. “We have way more buyers than we have properties to sell.”
The heightened demand is fueled by record-low mortgage rates. Freddie Mac reported on Thursday that the 30-year fixed-rate average was 3.59 percent. The 30-year rate has been below 4 percent all but one week this year. The 15-year fixed-rate average has lingered below 3 percent the past 11 weeks. These low rates make homeownership more affordable. Many would-be homeowners, spurred by the low rates, are seeking to buy, but they aren’t finding much to choose from.
Typically, the number of listings swells after the new year and continues to rise through the spring selling season. This year, listings fell in January, dropped some more in February and rebounded slightly in March and April, according to data provided by RBIntel, a subsidiary of MRIS. Even with that slight improvement in the spring, the number of active listings in April compared with the figure a year ago was down more than 30 percent.
In June, the Washington area had its 16th consecutive month of year-over-year declines in active listings. The number of active listings in June shrank to a historic low, falling to 10,374, down 33 percent from a year ago. The 5,588 new listings entered in June are the lowest for the month of June since RBIntel started tracking the data in 1997.
Tim Ellis, a real estate analyst, monitors housing data for Redfin. “It’s a really weird dynamic this year,” he said. “What you typically see seasonally is really not what we’re seeing.”
The lingering effects of the housing bust are in part causing this stagnation in the market. Too many people can’t afford to sell their houses because they are underwater on their mortgages or they bought at such a high price they are waiting for the market to rebound. The continued economic uncertainly also makes people reluctant to make major purchases. And those who can sell are afraid there won’t be anything for them to buy, so they do nothing.
For those looking to buy a home, especially first-time buyers, it is a frustrating time. Ben Bennett, a 26-year-old teacher at a D.C. public charter school, has been house hunting for the past year without success. Bennett appears to be a perfect candidate for home ownership. He has no debt, he has saved for a down payment and his credit score is excellent.