The competition in today's housing market is suddenly fierce, so fierce that some are calling the cops.
"We got shut down!!" laughed Catherine Luther, an agent with Channing Real Estate in the Boston area. "I've been in this business for 30 years, and it's never happened before."
At a Saturday open house at her listing in suburban Belmont, she had over 100 people in 45 minutes, which blocked the street. Neighbors called police, who shut down the open house. Then Luther smartly hired an off-duty officer to direct traffic the next day for the Sunday open house. The officer counted more than 150 cars. The three-bedroom colonial house went under contract three days later with more than a dozen bids.
"It's just that we're lacking inventory. We really need more inventory. Prices are going up, and we just don't have enough property to sell," said Luther.
At a recent open house in Seattle, the story was nearly the same. The agent logged more than 100 potential buyers.
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City to city, neighborhood to neighborhood, the story is the same everywhere. Spring demand is coming out with the sunshine, but there is just nothing to buy. There was just a 4.7 month supply of homes for sale in January, even before the spring surge, according to the National Association of Realtors. Six months is considered a balanced market. While more sellers are listing now, it is not nearly enough to meet demand.
In January, Ramez Farag and Kim Mardenly sold their house in New Milford, New Jersey, in just four days. They have been trying to find a bigger home nearby to buy ever since then.
"The surprising part to me is how little the inventory there is. There's just not that much up here," said Farag. "A lot of houses you almost exclude because you kind of feel people are putting houses out at ridiculous numbers—you have to eliminate that. They are just throwing it out there, but for realistic houses, realistic numbers, there's just not that much at all."
Driving demand are several factors: increased consumer confidence, better employment and sky-high rents. More than 12 percent of current renters in the nation's 20 largest housing markets now say they intend to buy a home in the next year, according to a survey just released by Zillow, a real estate company. That is about 5.2 million renters, a 25 percent jump from a year ago.
"As home affordability continues to look great and rental affordability looks abysmal, many current renters clearly seem to be rethinking their attitudes toward home ownership, and are expressing more confidence in the overall housing market as a result," said Zillow Chief Economist Stan Humphries. "But while this confidence is heartening, it's important to inject a note of reality here: Not all renters who want to buy this year will be successful. Saving a down payment, qualifying for a mortgage and finding an affordable home to buy all remain formidable challenges for many."
With increased competition for precious few homes, prices have no where to go but higher, faster. Home price gains, which had been shrinking last year, have just taken a U-turn and are now seeing bigger gains. That makes it more difficult for first-time buyers to get in, but they are still out there looking. There are, however, new, low down payment loan options, introduced in the past few months and weeks.
"By the time you roll the systems out and get sales attention and customer attention, we're only now just beginning to see some flow of activity coming into it," said Mike Heid, president of Wells Fargo Mortgage.
These loans, which require just 3 percent down, will allow more buyers into the market, if, that is, they can afford the higher prices. As interest rates begin to rise, consumers seem more urgent.
"We're afraid that interest rates are going to creep up, and inventory is down, so there's more of a fear of loss right now in the market and people are coming out, Maria Rini, a real estate agent with Re/Max in Bergen County, New Jersey.
Rini, who has been selling homes for 21 years, says inventory in her market is just 60 percent of what it was five years ago. She does add that buyers are picky and won't pay the higher prices if they don't see the value.
"There are a lot that are over priced," said Farag, "but they have been sitting on the market for over a year, and they are sitting are the market for a year for a reason, but the ones that do hit the market priced right are moving quickly."
For now, Farag and his wife will move in with his mother while they continue to search.