Currently, houses are staying on the market for an average of six days nationwide, according to data from Zillow, an impressively fast turnaround. That's a seller's dream, but potentially bad news for buyers, who face enormous competition and might end up paying more and forgoing important parts of the homebuying process — like inspections — to get their offer accepted quickly.
A few different factors have created this homebuying environment, says Jeff Tucker, senior economist at Zillow. The most obvious is the Covid-19 pandemic, which accelerated many people's homebuying timelines. Coupled with historically low interest rates, buyers wanted to lock in extra space and a good deal on their mortgages.
That coincided with a large group of millennials, America's largest generation, reaching their prime homebuying years, says Tucker. He expects demand will continue to be high for a few years as these late-20, early-30-somethings naturally start to nest.
But with such a hot market, prospective homebuyers might be better off waiting until the fall or even next year to buy, Tucker says. Though no one can say with exact certainty what will happen, he says inventory is already starting to rebound a little bit, which will give buyers more options. Zillow expects home prices to stay elevated for the next year, at least.
"This is a really challenging time to be a buyer. The market is as hot as we've ever seen it before," Tucker says. "If they can watch and wait for the next several months, time is on their side."
Of course, many people may not be able to wait for the opportune moment to buy a home, or they simply may not want to put it off for a few more months. And mortgage rates are still low enough that buyers may be willing to forego their dream house to lock in better financing.
But buyers should still consider the urgency of their move, says Kristina Morales, an Ohio-based realtor at Morales Team Real Estate. If you don't immediately need more space, it might make sense to wait out the crazy market right now, rather than make concessions. Otherwise, be ready to pay a premium.
"If you have to buy right now, you have to be realistic about the offers you're putting in," Morales says. "You're not going to get a deal, you are likely going to pay well over the ask." She says when she sold her own home earlier this year, she sold it in two days for $75,000 over her asking price.
Many buyers are also offering all cash, or foregoing their own inspections to entice the seller to accept their offer. But that's a mistake: No buyer should skip the inspection because it will highlight potentially costly repairs they'll need to make right away. And with prices for building materials also elevated, those repairs will be even more expensive.
Buyers also need to know their non-negotiables going into the buying process. For example, being in an area with good schools, or a quieter neighborhood located away from a freeway. While cosmetic changes can be made to a house, the location can't be changed.
Though many buyers can get caught up in the emotions of competing with so many other bidders, Morales advises taking a step back and considering if a home checks off enough boxes on your wish list. She tells her clients: If you make an offer on this home today, how will you feel about it when you wake up tomorrow? That can give some perspective.
"Don't give up," she says. "The right home will come."