The coronavirus pandemic has thrown yearly buying and selling patterns out of whack, with a big reduction in inventory and an increase in asking prices in many of the country’s biggest markets.
During the second quarter of 2020 — typically a time when the number of listings spikes for the spring buying season — the 50 largest American metropolitan areas saw an average of 23 percent fewer homes listed compared to a year earlier, according to NerdWallet’s First-Time Home Buyer Metro Affordability Report — Q2 2020.
Today’s super-low interest rates, which make it possible to borrow more money at the same monthly cost, would seem to help home buyers, but the inventory-depleted market counteracts the benefit. Bidding wars that drive up purchase prices are inevitable with increased competition, so this year fewer potential buyers will be able to find a home they can afford.
What’s been the effect on asking prices? According to the report, in the second quarter of 2020 they were up by an average of about 3 percent in those 50 metro markets compared with a year earlier, and about 5 percent above the first quarter of 2020. Overall, these rates of growth are comparable to patterns in recent years. But buyers beware: Given the scarcity of homes and low interest rates, consider the second quarter’s asking prices shown in this week’s chart as mere starting points. Final sale prices will often be higher than advertised.