Home prices are rising, along with post-lockdown demand

Mortgage rates may be appealingly low, but people shopping for a new home this spring face a challenging market.

Demand, which was pent up during coronavirus stayat-home orders, and a dearth of homes for sale, are keeping prices high and setting off bidding wars in some areas as states reopen for business. Some buyers may also find it tougher to qualify for mortgages, as lenders require higher credit scores and bigger down payments in response to higher unemployment and economic uncertainty.

The situation is different from the economic downturn in 2008, when home prices fell sharply as a housing bubble popped.

“We’re still seeing a huge seller’s market,” said Colsie Searcy, an agent in Colorado Springs, Colo.

Nationally, the median price for a home, excluding new construction, was about $287,000 in April, up more than 7 percent from a year earlier, the National Association of Realtors reported.

Housing supply was already tight in recent years, especially for first-time buyers, because of the sluggish pace of new construction, said Danielle Hale, chief economist for listing site Realtor.com. Then uncertainty because of the pandemic gave buyers cold feet, leading some sellers to pull their homes from the market.

Home sales in April were down about 18 percent from a year earlier. Declines were particularly steep in the West. But Realtor.com reported this week that there were signs of improvement in May, “setting the stage” for continued recovery over the summer.

Now, with many states lifting restrictions on home tours, the housing market is reawakening. Shoppers are feeling more comfortable visiting properties: About two-thirds of people who attended an open house within the past year said they would attend an open house now “without hesitation,” a separate survey from the Realtors association found.

But some sellers remain cautious. They want to show homes by appointment only, and they want offers from serious buyers who have been preapproved for financing, said Lawrence Yun, chief economist with the association.

“They don’t want casual shoppers,” he said.

Jay Rinehart Jr., a broker in Rock Hill, S.C., said he did a lot of “coaching” to prepare buyers for the market. (He sells homes in South Carolina as well as in North Carolina, near Charlotte.) He recalled that early last week, seven homes were available in a client’s price range. By the end of the week, there were just three.

Because the market tilts in favor of sellers, Rinehart advises buyers to ignore certain issues, like minor repairs, that they may have negotiated over in a less heated market.

“This is an unusual time,” he said.

While most balk at buying

shoppers properties without visiting them first, that has sometimes been necessary during the pandemic, said Donna Deaton, a relocation specialist in the Cincinnati and Dayton, Ohio, areas. While traditional open houses are returning in some markets, she said, some property owners still prefer that shoppers make appointments. Buyers who sign up for the first available slots get to make the first offers, leaving those with later appointments out of luck.

“We are scrambling to find homes for buyers,” Deaton said.

One problem, she said, is that some sellers are reluctant to put their homes on the market because they worry they won’t be able to find a new property for themselves and will have to rent while they shop.

In some cases, homeowners who were planning to sell have decided to remain where they are and renovate instead, adding home offices because they expect to commute less, said David Legaz, a broker with Keller Williams in Flushing, N.Y., and the president-elect of the New York State Association of Realtors.