It’s no secret that buyer demand has been extremely high ever since the Federal Reserve substantially reduced interest rates during the pandemic. In fact, the median value of a home grew by more than 17% in 2021, which was the result of exceedingly high demand and a relatively low housing supply.
When the market conditions heavily favor the seller, it’s common for intense bidding wars to take place and home prices to be driven up as a result. While buyer competition is still high, there are signs that competition is easing.
According to a recent report by the National Association of Realtors, the average number of offers made on sold homes has dropped by a considerable amount over the last few months.
The average number of offers per home reached a high of 5.5 in April 2022. Since then, the numbers have dropped steadily with each passing month. In May the average was around 4.0 offers, in June it fell to 3.3, and by July the average was just 2.5 offers per home. This number may drop even further in the months to come.
Higher Interest Rates
This decrease in offers can be attributed to two things. Number one, higher interest rates. Multiple Fed rate hikes this year have made it more expensive to buy a home and have caused some buyers to leave the market temporarily. Number two, a slightly higher inventory of homes on the market. Buyers have more options to choose from and may not be scrambling to put offers in. With lower buyer demand and more homes on the market, competition is effectively reduced.
What These Trends Mean for You
Even though there were a high number of buyers that were searching for homes in 2021, many potential buyers decided to stay out of the market because of the intense competition. Even if you were willing to offer more than asking price, there was a good chance that you would have been outbid throughout most of 2021.
What the last few months indicate is that buyer competition is easing, which significantly reduces the possibility that you’ll need to manage a bidding war. Even though the market is still tilted towards sellers, a greater number of homes on the market means that potential buyers may be able to make an offer and purchase a home without too much hassle.
If you avoided buying a home over the past couple of years because of the high competition, now might be a great time to start searching for a new home. Even though buyer demand is still relatively high, it has dropped considerably over the past few months. If you’re in the market for a new home, you should have less competition when making an offer.
What to Inspect at an Open House
When a seller has listed their home on the market, they will sometimes host an open house or an open inspection. This means that the home will be available to tour and inspect at a specific time. As a buyer, this gives you the opportunity to look at every facet of the home before making an offer.
While there will likely be other potential buyers touring the home as well, you should still take this opportunity to inspect the aspects of the property that mean the most to you. Here are some key things to look out for.
Noise and Traffic Levels
Make note of noises and traffic during the open house, but also try to visit the property on different days and various times of day. Drive by the property during evening rush hour or a weekend afternoon to see what it is like then. While traffic and noise levels could be low in the morning, they may be higher than you would like once evening rolls around.
Significant structural issues can raise the costs of owning a home considerably, which is why these are among the most important issues you should look out for. Some of the most common structural issues to search for include:
Bouncy or sloping floors
Cracks above windows or doors
Windows that don’t open easily
Water issues can cause major damage fast. Take a peek at exposed piping in basements or laundry rooms, and under sinks. Check for rust, water stains, or leaking. Also keep an eye out for:
Damp walls or water stains on the ceiling
Moldy walls and peeling paint
Bubbles or blisters on the paint
Musty odor (or excessive coverup odors)
Additional Areas of Focus
Condition of floors/carpets
Condition of appliances
Location and number of electrical outlets
Condition of landscaping
Structural Integrity of garages and sheds
Size and quality of windows
Amount of storage space
Keep in mind, a home inspector is likely to catch any major issues down the line, but scanning for warning signs early in the process can ensure you don’t waste your time. With this checklist in hand, you should know exactly what to look for when attending an open house.