Entry-Level Homes Are Selling Faster Than Ever

Homes in the United States are selling as fast as they do in the spring. This September marked one of the fastest months this year, posting a median days on market (DOM) of 16 days, down from 28 the year prior and 6 days faster than May 2019.

While the weather may be cooling down, the housing market shows no sign of it, leaving industry professionals in the dark when it comes to predicting how markets will move going into the closing months of 2020.

Entry-Level Homes Lead the Way

New Zillow research finds that while all homes are selling faster than usual, entry-level homes (prices ranging from $186,000-260,000) are leading the charge, selling at an median rate of 14 days, 6 days faster than September 2019. Mid-market homes followed closely, selling at a median DOM of 16 days.

Perhaps a surprise to some, the cheapest homes on the market (prices less than $186,000) sold in 18 days, the slowest market besides luxury and larger homes. The consensus seems to be that a lot of these homes are considered “fixer-uppers.” In the wake of a pandemic, younger people and families trying to balance working from home with life would rather not spend time and money renovating.

Real Estate News Roundup: Foreclosures Low, Delinquencies Up; Frenzied Homebuying Persists

The high-speed real estate market we are witnessing—despite the whims of 2020—can be attributed to a few factors. For one, working and schooling at home have made families desperate to find more space. This has led to an uptick in entry and mid-market sales throughout the U.S. Two, record-low mortgage and interest rates have created a lot of opportunities for first-time homeownership, explaining the high turnover of entry-level listings in the market.

On top of that, the pandemic has forced many sellers to use digital means of marketing and showing homes to buyers, such as utilizing 3D home tours. This has allowed for more exposure, faster sales, and more young buyers to enter the market.

The question going forward is: will the market remain like this?

High-End Sales Lag, But Still Ahead of Last Year

Luxury and high-end sales (prices $488,000 and up) had a median DOM of 33 days in September, 15 days more than the second highest. However, these homes are still selling two weeks quicker than last year.

“Normally, the housing market begins to slow down around this time of year as the weather cools and buyer activity fades, but it’s 2020, and nothing is normal this year,” said Zillow senior economist Chris Glynn. “Instead of slowing down, we’re seeing the housing market continue to speed up as Autumn continues. The buying season we’re seeing this fall more closely resembles peak market activity we’d see in the spring in a typical year. It remains to be seen whether the ‘traditional’ buying season continues to be pushed back because of Covid-19 and activity will taper off in coming months, or whether historically low inventory and continued strong demand mean homes will continue to sell incredibly quickly through the rest of the year.”

Usually, in the latter half of the year, the DOM spread between the least and most expensive homes is broad. This year, it’s much tighter, as exhibited in metros like San Francisco, Salt Lake City, Seattle, and Pittsburgh—the bottom market sold just two days faster than the upper market.

The Markets Selling the Fastest and the Slowest

Among the top 50 largest markets in the U.S., the lowest median DOM in the month of September belonged to Columbus (4 days), Cincinnati (4 days), Kansas City, Missouri (4 days), and Indianapolis, Indiana (5 days).

The metros seeing most days on market are Nashville (36 days), New York (28 days), Virginia Beach, Virginia (28 days), and San Antonio (27 days).

Investor Outlook

Deals are scarce—but they’re out there.

Looking to buy fixer-uppers? It could be your time to shine. Buyers want entry-level homes, but they don’t want to DIY a rehab right now. Pay extra attention to finding a diamond in the rough this season. It surely won’t last on the market once you fix it up and list it.

Thinking about selling? Go list your property right this second. Your home is on someone’s holiday wish list—and a nice profit will be yours for the taking. (We promise it won’t be any less special without wrapping paper and a bow.)

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.