Homebuying competition ignites the market
Today’s HousingWire Daily features an interview with Opendoor Broker Associate and Consumer Trends Expert, Beatrice de Jong. In this episode, De Jong discusses the current state of the housing market and why competition is fierce for homebuyers.
During the episode, de Jong talks about the competitive nature of the housing market, and whether or not she believes it will continue going forward.
Here is a small preview of the interview with De Jong, which has been lightly edited for length and clarity:
HousingWire: Since the beginning of the pandemic, we’ve continued to see an increase in homebuyer demand and an incredibly hot housing market across the country. Outside of driven demand, potential homebuyers face a challenging market due to low inventory, rising home prices and costly lumber materials. In your experience and as a consumer trends expert, can you explain the dynamic between buyers and sellers?
Beatrice de Jong: As you said, there’s a low supply, low mortgage rates and high buyer demand. There’s this kind of real estate trifecta. On top of that, the majority of sellers also need to buy, so the ability to unlock equity to win your next home is a top of mind issue. It’s driving many homeowners to be hesitant to sell. And even sellers are kind of in a tough position. They may be worried about their ability to find and finance their next home fast enough after they sell their current home.
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Below is the transcription of the interview. These transcriptions, powered by Speechpad, have been lightly edited and may contain small errors from reproduction:
Victoria Wickham: Hello, HousingWire listeners. Today I am joined by Opendoor broker associate and consumer trends expert, Beatrice de Jong. Beatrice, thanks for joining us today.
Beatrice de Jong: Thank you so much for having me.
Victoria Wickham: Absolutely. Well, listeners, today Beatrice will be speaking to us about the current state of the housing market, and why competition is fierce for homebuyers. So since the beginning of the pandemic, we’ve continued to see an increase in home buyer demand, and an incredibly hot housing market across the country. Outside of driven demand, potential homebuyers face a challenging market due to low inventory, rising home prices, and costly lumber materials. So in your experience, and as a consumer trends expert, can you explain the dynamic between buyers and sellers?
Beatrice de Jong: As you said, there’s a low supply, low mortgage rates, and high buyer demand. So there’s this kind of real estate trifecta. On top of that, the majority of sellers also need to buy. So the ability to unlock equity to win your next home is a top of mind issue. It’s driving many homeowners to be hesitant to sell. Even sellers are in kind of a tough position. They may be worried about their ability to find and finance their next home fast enough after they sell their current home.
Victoria Wickham: Right, right. Yeah, that’s really interesting. That’s a good point. Well, you know, I’d like to focus on the competitive component of the housing market as competition is steep for homebuyers with many markets seen all outbidding wars. So according to a recent Redfin study of clients buying homes between June 2020 and February 2021, homebuyers who offer all cash improve their chances of winning a bidding war by 290%. So in your perspective, do you think this is a trend we’re going to continue to see more of going forward?
Beatrice de Jong: I do believe we’ll continue to see increasing buyer demand. There are more first time homebuyers entering the market. And on top of the other trends we’ve seen with remote work, people are realizing the need for space and the ability to live outside of cities. With more demand than supply, the competition is really tough. So in these conditions, sellers favor certainty, which is what an all cash offer provides. When a seller is comparing multiple offers, they just want to accept one that is certain to close. So with a cash offer, there’s less chance of the financing causing problems making the transaction fall through.
The issue is not everyone’s lucky enough to have cash on hand to buy a home. But at Opendoor, we’re helping to democratize the home buying process by enabling everyone to reap the benefits of being an all cash buyer. We recently introduced a cash backed offer program that backs our buyers’ offers with Opendoor’s cash. They can get pre-qualified with either Opendoor home loans or any mortgage lender of their choice. One of our partner agents will review your offer, make sure it has the strongest terms and submit it to the seller backed with Opendoor’s cash.
In fact, our program has an average acceptance rate 50% higher than regular offers made without cash backing. We had worked with this client or customer in Atlanta who found her dream home on the market, and it was listed at $525,000. And in just the two days that it was on the market, it already had four offers. And we submitted an offer that was $25,000 lower than the highest priced offer. But the seller accepted our offer because of that certainty and peace of mind and our cash backed offer program. So that’s just one example of how cash is king in this current market.
Victoria Wickham: Yeah, we definitely have established, like it is an incredibly hot housing market. It is competitive and fierce for these home buyers. But we’ve talked about how competitive the market is. So what do you think potential home buyers should be keeping in mind when buying a home this year?
Beatrice de Jong: Winning at home may not be easy when you’re up against the competition, but it will be worth it once you get the keys and you can move in. High prices are so discouraging. But know that there are other ways to appeal to the seller through the terms of your offer, or even our cash backed offer program.
Victoria Wickham: All right. Well, I’d like to get your perspective on the current state of the housing market. Do you believe the market is motivating for potential homebuyers and sellers? Or could current trends potentially steer a buyer’s dream of owning a home?
Beatrice de Jong: It’s tough, the competition’s really tough, but it’s worth it for buyers to jump in now. Remember that home values are determined by recent sales in the neighborhood. So each home that’s being sold at a higher price after a bidding war is driving prices up in the whole area. Waiting too long can mean that a buyer gets priced out of their location where they had originally started shopping for a home. Every client feels that heartbreak when they lose out on an offer. But once they do land a home, they’re so happy that they stuck with it.
Victoria Wickham: All right. Well, I had one last question for you. Just as someone that is looking at the trends currently, what is something that stands out to you the most about these trends this year in the housing market?
Beatrice de Jong: Just prices are just going up and up. You know, I’m hearing in every single market that we’re in nationally that homes are getting multiple offers, and you know, buyers are just having such a tough time winning homes right now.
Victoria Wickham: All right. Well, lastly, before we go, Beatrice, is there anything else that you’d like to add today or anything else our listeners should know?
Beatrice de Jong: I encourage anyone buying home to check out our cash backed offer program, see if it can help you win your dream home. And if you’re selling a home, we can also help with that process by making it as easy and stress free as possible. You can visit us at opendoor.com.
Victoria Wickham: Thank you so much. We appreciate your time today.
Beatrice de Jong: Thank you.
Victoria Wickham: Absolutely.