What is a seller's market and what is causing a house shortage in Metro Detroit?

Real estate is hot right now, with homes going on and off the market in a matter of days.

If you're trying to buy, you probably know the frustration of your dream house switching from "for sale" to "pending" before you even see it, or your offer that went well over asking being outbid by one of the other 20 offers.

It's definitely a seller's market right now, meaning that there are more buyers looking for homes than there are homes available. 

MORE: Record low house inventories pose challenges for Michigan home buyers

A few factors are causing this, including low interest rates, more young people beginning their home search, and fewer older people moving.

According to Jeanette Schneider, of Remax of Southeastern Michigan, the COVID-19 pandemic has contributed to the shortage.

"You’ve got a lot of Baby Boomers that are current homeowners and either for their own health they are a little leary of people coming and being in their homes, so they’re choosing to just not to put it on the market. Or if they are in the upper end of the age spectrum for Boomers, they’re definitely not interested in moving into a nursing home or assisted living right now," she said.

Additionally, homeowners who have spent time improving their houses while stuck home during the pandemic may be deciding not to move. Low interest rates have also led to homeowners refinancing their current mortgages rather than selling and buying a new home.

Those same interest rates are attracting more people to the market right now, but the inventory is low and prices are up more than 16% in Metro Detroit.

Related: How to prevent buyer's remorse when purchasing a home in a seller's market

"We've had demand. We have demand because we've got a large millennial population trying to buy first homes, or maybe their first move-up home. We have Baby Boomers that aren't as quick to forego the family home as maybe what past generations have been," Schneider said. "So we've got folks that are staying in place and then comes COVID, so now you've got a group of people saying, 'I'm not sure I want to sell my home. I've refinanced, I've made some home improvements over the last 6-12 months. I'm going to stay put.'"

In a seller's market, buyers have little time to deliberate before deciding to put an offer on a home. 

If you are planning to buy right now, Schneider said you have to be prepared and act fast. This includes having a pre-approval for a mortgage and knowing how much you can afford.