What DOES it take to win these days?
By Daniel Riordan
The 2021 market will go down as the hottest seller’s market in the last 50 years. Fueled by the millennial generation’s decision to buy after years of saving, Boomers transferring their wealth to make these purchases happen, and historically unprecedented low interest on mortgages, 2021 was the perfect storm.
Add to this a housing shortage, a pandemic that has us all yearning for more versatility in the place we call home, and homes that can be toured virtually and which sell in hours, it’s no wonder that buyers are increasingly asking what in the world they have to do to win.
While general macro-answers can be informative, the truth can only be found in a deep dive into the micro-dynamics of the specific area where your dream house awaits.
Take Falls Church, for example. I’m doing this analysis for clients the week between Christmas and the New Year.
At the moment, my clients are searching for a single-family home with a budget of up to $1,400,000. They need at least four bedrooms and two bathrooms.
The Supply Side:
In Falls Church proper there are only 9 homes that meet these basic criteria. No new homes were listed in the past week, and only two were listed in the past month. Slim pickings! In addition, three have gone under contract in the last two weeks.
The Demand Side:
What’s interesting about these 9 homes is that they have spent three or four times longer on the market than their neighbors who listed in the Spring and Summer. Also of note is that while supply is low, so is the current demand this December (a trend that often continues in early January). How can we tell? Consider that the average number of showings per home each week has been just over 4 showings. Compare this to the 40 showings we were booking in a day during the Spring and Fall markets of this year.
The data shows that the average number of showings to go under contract is just 4, so on average, a Falls Church home that does not have any major objections can sell in a week. However, there are 9 current examples of homes that are lingering past a week.
What It Takes To Win:
What does this mean for a buyer who wants to win in the Falls Church market this winter? Well, while the market has pushed the average sales price up 6.04% over the past year, if you find a home you like, you’ll have less competition today than perhaps any time in the past two years. It also means that you are likely to pay right around the asking price for a home today or maybe even a bit less. Contrast that with paying an average of 7% over list price in the Spring of 2021 after losing on 8 offers.
Will this favorable buyer trend continue in 2022? Probably not. Millennials are not going anywhere and neither is their parent’s wealth. Rates are still incredible and builders still can’t keep up with demand. This is good news once you win the opportunity to own a home. But what I want to also point out here is that if you are patient, and can wait for the right home at the right time of year, you can live where you want and get a deal on your terms.
Here’s a final takeaway: Don’t settle. The inventory that is on the market is where the feeding frenzy is most acute. It’s also just the tip of the iceberg. To win, you should also have access to off-market deals. Good agents should have built a strong network of both other agents who have not-yet-listed homes, past clients who want to choose their next neighbor, and a series of other strategies to beat the bushes for the right home for you.
