Signs show that the competition for entry-level homes is on the rise this season, as homebuyers across the country are quickly pulling affordable homes off the market.
According to research from Zillow, there is a high demand for U.S. homes overall as the typical American home sold in only 16 days this September, which is 28 days less than they sold last year. However, the homes that sold the fastest were affordable homes ranging between $186,000 and $260,000, which sold in 14 days last month.
Mid-market homes between $260,001 and $344,000 also sold quickly at around 16 days on the market. The country’s most affordable homes, which went for $185,999 or less, took approximately 18 days to sell in September. Homes costing $488,000 and up spent the longest time on the market and took about 33 days to sell.
The increase in demand for more affordable, entry-level homes may be due to more telecommuters looking for a new place to live and work. Others may simply be first-time buyers taking advantage of the record-low mortgage rates the market has seen in recent months.
The high demand for affordable homes is met with a lower than usual supply, causing competition to heat up. Zillow reports that the touch competition may be why 12% of buyers are willing to purchase homes without seeing them in person.
The difference between the days-on-market for the most affordable homes versus the most expensive homes is getting smaller, which shows an overall high demand for homes across the spectrum of prices. In some metropolitan areas, such as Salt Lake City, Seattle, Pittsburgh and San Francisco, there was little to no difference in days on market between the most and least expensive homes sold.
Redfin reported that 56.3% of offers made on its sight faced bidding wars in September, yet another sign of tough competition for homebuyers. However, this is a slight decrease from August, which saw a 59.1% rate of Redfin offers facing bidding wars.