Strong demand and thin inventory across housing markets is causing increased competition among buyers and homes to sell for the asking price or more.
CoreLogic recently reported that home prices and sales have increased back to pre-crisis levels, and the share of homes selling for the list price or more has returned to pre-bust levels.
CoreLogic noted, "With inventory tight, homes are more likely to sell above the asking price."
“Looser credit is fueling booming first-time buyer demand,” said Edward Pinto, Codirector of the AEI’s International Center on Housing Risk. “This in combination with shortness of supply, as evidenced by a seller’s market now in its 38th month, is fueling a vicious cycle that is driving real home prices higher—up 14 percent over the last 13 quarters and spurring calls for even looser credit.”
According to the report, the amount of homes selling at or above list price has recovered to early 2006 levels, and was 3.5 times the trough in January 2008 and accounted for one-quarter of sale in October 2015. On the other hand, there are sellers that will remain motivated to sell despite market conditions.
In October 2015, the inventory of existing homes for sale returned to January 2006 levels, but was still 33.1 percent below the July 2007 peak. Low labor and lots have caused new-home to 3.6 percent in October 2015.
As the housing market continues to improve, more buyers enter the market, and inventory levels decline, favor now rests in sellers' hands.
While new housing units are on the upswing, the numbers are still at historical lows," said Tom O'Grady, CEO of Pro Teck Valuation Services. "That, combined with approximately 2.5 million single family homes becoming rental units since the crash has left the U.S. with a limited housing supply.