I've been a licensed Realtor for 16 years, and I have never seen a market like this. I teach home buyer and home seller classes (for 15 years) so excuse me as I go into 'teacher phase'.
It is being driven by a couple of things... One is the crazy low interest rate, and Second is the lower than normal inventory of homes for sale. This is NOT a typical market. The real estate market usually runs on a fairly predictable cycle. On 'average', the best time of the year to be a buyer is what I call, "happy hallowthanksmas". This is November through early February. This is the time of the year when inventory is usually the lowest, but there is usually the least amount of buyers on the market too. Nobody likes to move during the holidays, and during the crappy weather. The best time of the year to be a seller (usually) is late February through April. This is the time where we see the most buyers on the market due to income tax refunds, but the home inventory (while better than during the winter) is still pretty low. This is the time of the most multiple offer situations.
Most home owners list after spring break and through early June. This is where we see the market level off a bit and is a good time for buyers & sellers.
After kids get out of school in early-mid June (remember those days?), we see less buyers and more home inventory. Late June, July, & August, is usually a good time to be a buyer. For buyers this is where most have less money for down payments/closing costs, earnest money, inspections, & appraisals, as they have more costs at home with kids out of school, daycare, summer vacations, and then the costs of getting ready for kids to go back to school (we can hope)...not to mention that it is hot. It is funny, but the hotter it is, the slower the housing market as most people would rather go to the lakes, beaches, & rivers than go see houses....go figure... LOL.
Then the market 'bounces' back in a September/October rush for people to buy home to be into before the holidays....and then we are back to 'happy hallowthanksmas'. This is USUALLY the predictable nature of the market.... unless something comes along and throws a wrench in it.
Remember when the teacher strike occurred? We didn't see that 'back to school - be in the home before the holidays' rush and the market remained slow all fall and winter. Killer deals for buyers occurred during this time.
Last year was... peculiar... we have never had something like that happen before...
2020 threw everyone for a loop. When the shut down first occurred the market went D-E-A-D. I mean.... it, like everything else... dropped. Then about May, people were like... HELLO HOUSING! ....and we bounced back in a big way. Most of this was because the interest rates bottomed out to rates never before seen. This, and the fear of rising interest rates (which IS happening) drove buyers out in droves. Unfortunately, for a lot of homeowners, it also prevented them for being able to secure their next housing, so many homeowners who would like to sell, are not selling. Also, with COVID, many homeowners are not comfortable with selling and having strangers walk through their homes. Builders are building like crazy because of the lack of established home inventory, but their costs are also being driven up considerably due to rising material and labor costs. Trusses alone went up 30% in one quarter. Those costs are, of course, being passed along to buyers. In fact, some builders are changing prices AFTER the contract is written and accepted...and right before closing. If buyers don't agree to the new costs, the builders are returning the previous buyers deposits, and then putting the homes on the market for even more... and getting offers at the new price.
It is brutal out there... So what needs to change? As an industry, most of us Realtors are hoping (beyond hoping, we are praying) that with the Vaccines, kids back in school (at least a little bit), and with spring & summer around the corner, that more homeowners are comfortable with the idea of selling and we see more homes come on the market. To do this, we need more sellers comfortable with contingent offers. It's hard to get a contingent offer accepted these days... and this means a lot of home owners aren't comfortable (and for good reason) with putting their home up for sale. No one wants to be homeless....
Honestly...interest rates are rising. This will start to bring down prices, but not the costs of your mortgage. This year, and next year are most likely 'transition years'. We need to transition to a more balanced market... this means higher interest rates, and home prices coming down. However, mortgage payments will remain the same, or go up a bit on the lower priced homes....because the interest rates are higher. You, as a buyer, are not pre-approved for a purchase price... you are pre-approved for an interest rate which calculates to a mortgage amount...based off your Debt to income ratio. The higher the rate, the less you are pre-approved for....and your interest rate can't be locked until you are about 30 days from closing. This is where building becomes especially stressful right now as rates have started rising.
I can go on further, but this is already SO LONG! Sorry... more information is available at the www.learningtobuyahome.com website and the blog/vlog there
Thanks for coming to my TED talk.... LOL