Intense competition drives a surge in offers on unseen homes
With a low inventory and coronavirus limiting accessibility, nearly half of home shoppers made offers sight-unseen in June, according to Redfin.
In a survey conducted last month, 45% of consumers who purchased a home in the last year put bids on houses without physically seeing them. It's the highest share since Redfin started tracking the data in 2015. Only 28% of buyers made these offers a year ago.
This dovetails with growing swaths of potential buyers waiving inspection and appraisal contingencies to strengthen their offers. The trend of sight-unseen bids will likely increase throughout the coming months, said Redfin chief economist Daryl Fairweather.
"I predict that by the end of the 2020 homebuying season, the majority of homebuyers will have made a sight-unseen offer," Fairweather said in a press release. "The pandemic has changed the way many people view homes, and on top of that, the market is highly competitive. If you aren't using this strategy, another buyer who is could beat you to the punch."
Social distancing measures made fewer listings available for touring and made house hunters less prone to see them in person. Approximately 25% of potential homebuyers will limit the open houses they go to and 18% said they wouldn't physically go see listings at all.
Distance partially drives this phenomenon, too. With remote work dominating the present and expected to be a new normal in the future, a record-high share — 27% of homebuyers — looked outside their current metro area, based on Redfin's migration report for the second quarter of 2020.
Zillow's latest Weekly Market Report corroborates the heightened market competition. As demand outpaces supply, properties went from for sale to pending at the fastest rate since the real estate site started tracking it in 2019. Overall, listings went off the market at a median pace of 14 days for the week ending July 25 — nine days faster year-over-year. Median time on the market dipped as low as four days in Cincinnati, Columbus, Ohio, and Indianapolis among the 50 largest metro areas.
Newly pending sales grew 16.1% from this time a year ago while new listings dropped 12.2% annually. Total inventory stands 26.3% lower year-over-year. This disparity caused listing prices to climb an average of 0.3% week-to-week, adding up to an annual growth of 6% in home prices.