Intense Competition Drives a Surge in Offers on Unseen HOmes
Didier Malagies • August 5, 2020
Intense Competition Drives a Surge in Offers on Unseen Homes
Jordan Borchard posted in
Housing in Housing News
Intense Competition Drives a Surge in Offers on Unseen Homes
National Mortgage News
Source: National Mortgage News
Written by: Paul Centopani
With a low inventory and coronavirus limiting accessibility, nearly half of home shoppers made offers sight-unseen in June, according to Redfin.
In a survey conducted last month, 45% of consumers who purchased a home in the last year put bids on houses without physically seeing them. It’s the highest share since Redfin started tracking the data in 2015. Only 28% of buyers made these offers a year ago.
This dovetails with growing swaths of potential buyers waiving inspection and appraisal contingencies to strengthen their offers. The trend of sight-unseen bids will likely increase throughout the coming months, said Redfin chief economist Daryl Fairweather.
“I predict that by the end of the 2020 homebuying season, the majority of homebuyers will have made a sight-unseen offer,” Fairweather said in a press release. “The pandemic has changed the way many people view homes, and on top of that, the market is highly competitive. If you aren’t using this strategy, another buyer who is could beat you to the punch.”
Social distancing measures made fewer listings available for touring and made house hunters less prone to see them in person. Approximately 25% of potential homebuyers will limit the open houses they go to and 18% said they wouldn’t physically go see listings at all.
Distance partially drives this phenomenon, too. With remote work dominating the present and expected to be a new normal in the future, a record-high share — 27% of homebuyers — looked outside their current metro area, based on Redfin’s migration report for the second quarter of 2020.
Zillow’s latest Weekly Market Report corroborates the heightened market competition. As demand outpaces supply, properties went from for sale to pending at the fastest rate since the real estate site started tracking it in 2019. Overall, listings went off the market at a median pace of 14 days for the week ending July 25 — nine days faster year-over-year. Median time on the market dipped as low as four days in Cincinnati, Columbus, Ohio, and Indianapolis among the 50 largest metro areas.
Newly pending sales grew 16.1% from this time a year ago while new listings dropped 12.2% annually. Total inventory stands 26.3% lower year-over-year. This disparity caused listing prices to climb an average of 0.3% week-to-week, adding up to an annual growth of 6% in home prices.
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Mortgage purchase applications are on a 22-week growth streak primarily due to a combination of improving market conditions, seasonal trends, and changing consumer behavior. Here's a breakdown of the key reasons behind the sustained growth: 🔑 1. Falling Mortgage Rates Mortgage rates have been gradually declining from the highs seen in 2023. Even small drops in interest rates significantly improve affordability, prompting more buyers to apply for loans. Borrowers are locking in rates with the hope that they’ve hit a local low. 🏡 2. Pent-Up Demand from 2023 Many potential buyers delayed purchases during 2023 due to high rates and limited inventory. As conditions improve, backlogged demand is being released into the market. 🌞 3. Spring & Summer Buying Season The U.S. housing market typically sees a seasonal increase in purchase activity starting in spring and continuing through summer. Families prefer to move during school breaks, contributing to more applications in this window. 💼 4. Improved Inventory Levels While still tight, housing inventory has started to improve slightly in some regions. Builders are offering incentives and new constructions are increasing, drawing more buyers into the market. 📈 5. Confidence in the Economy A strong labor market and steady wage growth are boosting consumer confidence , encouraging people to buy homes. Some buyers are moving before potential rate hikes or home price increases . 💡 6. Shift Toward Homeownership Rising rents and lifestyle changes post-pandemic are pushing many toward owning rather than renting . First-time homebuyers are a large portion of this demand. Summary: The 22-week growth streak in mortgage purchase applications is being driven by lower mortgage rates, seasonal buying trends, improved inventory, and returning buyer confidence . While challenges like affordability and supply remain, these positive signals suggest a slow but steady rebound in the housing market .
During the mortgage process, several disclosure documents are provided to help you understand the terms of the loan, your rights, and the costs involved. These disclosures are required by law and are designed to promote transparency and protect you as a borrower. Here’s a breakdown of the key disclosures you'll receive: 1. Loan Estimate (LE) When: Within 3 business days of submitting a loan application. Purpose: Provides a summary of the loan terms, estimated interest rate, monthly payment, closing costs, and other fees. Key sections: Loan terms (rate, type, prepayment penalty, balloon payment) Projected payments (principal, interest, taxes, insurance) Costs at closing (origination charges, services you can/cannot shop for) Why it matters: Lets you compare offers from multiple lenders. 2. Closing Disclosure (CD) When: At least 3 business days before closing. Purpose: Provides final details of the mortgage loan, including actual costs. Key sections: Final loan terms (rate, payments, closing costs) Cash to close (how much you need to bring to closing) A detailed breakdown of costs and payments over time Why it matters: Helps you confirm everything is accurate before you close. 3. Mortgage Servicing Disclosure Statement When: Within 3 business days of application. Purpose: Explains whether your loan might be sold or transferred to another company for servicing. Why it matters: Tells you who will manage your payments and account. 4. Affiliated Business Arrangement (AfBA) Disclosure When: At the time of referral to an affiliated business (e.g., title company). Purpose: Discloses any relationships between the lender and other service providers and explains you’re not required to use them. Why it matters: Ensures you know if there’s a potential conflict of interest. 5. Home Loan Toolkit (for purchase loans) When: Within 3 business days of application. Purpose: A consumer-friendly booklet from the CFPB that explains the mortgage process, costs, and how to shop for a loan. Why it matters: Helps first-time buyers understand the steps and choices. 6. Right to Receive a Copy of Appraisal When: Within 3 business days of application. Purpose: Notifies you that you can get a copy of the appraisal at no additional cost. Why it matters: Gives you insight into the value of the home you’re buying or refinancing. 7. Initial Escrow Disclosure When: At or within 45 days of closing. Purpose: Details amounts to be collected in escrow for taxes and insurance. Why it matters: Shows how your monthly mortgage payment is allocated. 8. Notice of Right to Rescind (for refinances only) When: At closing (for primary residence refinances). Purpose: Gives you 3 business days to cancel the refinance loan. Why it matters: Protects you from making a rushed decision. tune in and learn at https://www.ddamortgage.com/blog Didier Malagies nmls#212566 dda mortgage nmls#324329
