COVID-19 has brought tremendous volatility to many economic sectors, and one area where the effects have been felt most strongly is real estate.
In most areas, the onset of the pandemic last spring temporarily brought the real estate market to a standstill. Economic uncertainty was high as businesses shut down, making both buyers and sellers hesitant to enter the market, while stay-at-home orders and health and safety fears made it harder to arrange showings, inspections, and in-person meetings during the closing process.
As time has gone on, however, demand in the real estate market has picked up in a dramatic way. With the transition to working and schooling from home, families are increasingly seeking out homes with more space and amenities. Moreover, government efforts to stimulate the economy have kept interest rates low and provided relief to households through expanded unemployment benefits and direct payments. Simultaneously, shifts in consumer behavior have pushed savings rates higher over the last year. This combination of factors has given more buyers the desire and the means to look for homes.
Despite this, increased demand from buyers has not been met with an equal willingness of homeowners to sell. Some would-be sellers remain worried about risking COVID-19 exposure from tours and showings, but economic conditions may be the main reason why current homeowners are opting to hold onto their properties. For example, the same low interest rates that are enticing prospective buyers also make it easier for homeowners to refinance and stay put. Since selling one house frequently means buying another, sellers may look at a competitive market with many buyers and decide to avoid the hassle.
The overall effect is a market with unusually constrained supply of homes for sale. Real estate inventory usually shifts on a seasonal basis, dropping in the winter and picking up in the warmer months. COVID-19 interrupted these trends when the pandemic emerged in March. Inventory held flat during the spring but began to decline soon after. By December 2020, the number of active listings on the market was nearly 40 percent lower than at the same point in 2019.
Limited supply has affected sales in two major ways: first, prices are much higher, and second, homes are flying off the market. As with inventory, time to close usually follows seasonal patterns, with sales taking longer in the winter and less time in the warmer months. And here again, COVID-19 had a strong impact: sales were unusually slow after stay-at-home orders took effect but accelerated again over the course of the year. The median number of days a home spent on the market in the last quarter of 2020 was more than 15 percent lower year-over-year than the same period in 2019.
And as with all real estate, location matters. Demand—and with it, the speed of sales—are especially high in Western and Southwestern states that have been experiencing the highest rates of population growth. This includes the three states where homes are selling the fastest: Washington, Nevada, and Arizona.
Many of the metros where homes are selling fastest show similar patterns, but there is additional nuance at the local level. Among small and midsize metros where homes are moving off the market quickly, many are just outside of larger metros with high demand, like Logan, UT near Salt Lake City or Vallejo, CA near San Francisco. This may be an indication that more workers are choosing rural and suburban locales where they can commute or work remotely while enjoying a lower cost of living. But among the major metros, COVID-19 has appeared to exacerbate existing trends in hot markets, meaning higher demand, lower supply, and faster time to sell.
To find the locations where homes are selling the fastest, researchers at Roofstock used Realtor.com data to calculate the median number of days property listings in each state were on the market, from the initial listing to the closing date. For comparison, the researchers also examined the year-over-year change and the change in median list price.
The analysis found that in Utah, homes spend a median of 56 days on the market, compared to the national average of 65 days. Among all homes being sold in the United States, homes in Utah are selling the 12th fastest. Here is a summary of the data for Utah:
- Median days on the market: 56
- Change in median days on the market (YoY): -5.5%
- Median list price: $480,872
- Change in median list price (YoY): +17.7%
- Median household income: $75,780
- Population: 3,205,958
For reference, here are the statistics for the entire United States:
- Median days on the market: 65
- Change in median days on the market (YoY): -3.0%
- Median list price: $334,081
- Change in median list price (YoY): +7.2%
- Median household income: $65,721
- Population: 328,239,523
For more information, a detailed methodology, and complete results, you can find the original report on Roofstock’s website: https://learn.roofstock.com/blog/homes-selling-fastest