Real estate is a seller's market as sales soar by 21 percent

New homeowner Lina Andersen purchased the Oakland, California, house she and her husband had been renting when the owner told them earlier in the year he planned to sell it. “Being priced out never really dawned on me,” she said. “But the rental market in that pocket of Oakland had just been booming.”

Andersen, who works in public education, and her husband, a merchant marine, worried that they would be forced to move for the second time in three years as property owners cashed out in a rising market. Displaced in 2018, they found their current home, but the rent was $1,100 higher — a prospect that made saving up for a down payment even harder. “Our rent was $3,800,” she said. “We had been saving as much as we can, but 20 percent on a lot of money is still a lot of money.”

The home, which the couple was able to purchase with financial help from family, needed a bit of work and didn’t have the scenic view its neighbors enjoyed, but Andersen viewed that as a small trade-off to be able to stay in the area and not have to uproot her two boys, aged eight and five. “As a parent, it was really emotional not having to tell them we have to move again because we can't afford to stay,” she said.

The Andersens’ agent, Kumi Hodge, said he sees high demand, tight supply and rock-bottom interest rates propelling prices higher. “I’ve noticed more calls about folks wanting to get out of their small apartment and getting a place with a yard,” he said.

Hodge, an Oakland native, said this shift makes it challenging for people to stay in the neighborhoods where they grew up. “I can’t afford any homes that I would live in in my own neighborhood. I’m making a solid income and I still can't access the homes that are local to me.”

Nationwide, the median home price in June rose to $295,300, driven by low inventory — a factor influencing the market even before the pandemic — and pent-up demand, said Lawrence Yun, chief economist for the National Association of Realtors. “Home prices rose during the lockdown and could rise even further due to heavy buyer competition and a significant shortage of supply,” he said.

“Many households have continued to work through the pandemic and maintained their purchasing power. It's really those households that are doing well that are fueling this demand,” said Chris Herbert, managing director of the Harvard Joint Center for Housing Studies. “This pandemic has tilted the scales towards suburbs.”

This dynamic can mean a windfall for sellers. “I was surprised by the number,” said Lisa Kolton, a social worker in Montclair, in New Jersey, who got an offer for more than $160,000 above her asking price in less than a week. Kolton said she believed that COVID-19, which has made roomier homes with backyards in the suburbs more appealing, was motivating city-dwelling buyers.

“I was anticipating that it would go fast but my realtor was also really surprised by how high it went,” Kolton said. “She told me there were 50 buyers looking at four or five houses, including mine, over the past weekend.”

The sense of urgency buyers report feeling stems from a few factors: The quest for more space as work-from-home and remote learning increasingly look to be longer-term phenomenon, social distancing constraints that dampen the appeal of public spaces such as pools and parks, the speed with which other buyers are willing to make offers, and a desire to lock in record-low interest rates.