Spring 2023's housing landscape might not mirror the whirlwind activity of 2021, yet certain segments and locations indicate a brewing competition, primarily due to inventory constraints.
Recent data from Seattle's Redfin Corp. reveals that almost half of the national home sales in the month leading to April 30 were finalized within a fortnight. This represents a slight drop from the previous year but a noticeable rise from just a month ago.
While the appetite for homes remains intact, fierce competition is primarily fueled by the exceptionally limited availability of homes. Many homeowners, who secured their properties at historically low mortgage rates during the pandemic's peak, are holding on to them, intensifying the already stark national housing deficit.
April saw a decline of 23% in new listings compared to the previous year, marking the second most significant dip since the pandemic began. This decrease outstripped the 17% drop in pending sales year-over-year.
Redfin's chief economist, Daryl Fairweather, observed a revival in bidding wars, particularly for homes that resonate most with buyers. She highlighted, “Homes ideal for first-time buyers, positioned conveniently near work hubs and transit points, are drawing multiple offers.”
This trend aligns with Zillow Group Inc.'s findings. Their research showed an 8% national price hike for homes situated in the lower third of the price range. Several cities, including Richmond, Miami, New Orleans, and Louisville, experienced a 10% uptick in the value of their lower-priced homes in the past year.
Conversely, mid and high-end properties are witnessing price reductions and fewer sales above the listed prices, as per Zillow's data.
Interestingly, even as new home listings are on a declining trend year-over-year, they've marked a month-over-month rise by 9.2% in April. Meanwhile, Redfin's stats indicate that homes are being snapped up faster than they're listed.
Fairweather expressed intrigue at this revived bidding fervor, given that buyers typically react sharply to interest rate fluctuations. Yet, the surge underscores the persistent and unmet housing demand.
Zillow's senior economist, Nicole Bachaud, echoed a similar sentiment, noting the unexpected competitiveness in the spring housing market. Recent data, up to March 2023, demonstrated that nationally, 30% of homes sold above their listing price, a phenomenon last observed in October.
Bachaud remarked, “While 2023 might not echo the frenzy of 2021, the cooling phase seems to have plateaued.”
The fickle nature of current interest rates adds to buyers' conundrums, causing uncertainty about mortgage qualifications. Bachaud touched upon some hopeful buyers who had anticipated a housing market crash for lucrative purchases. However, the consistent demand coupled with scanty inventory has dashed such hopes.
She concluded, “The current market isn't buyer-friendly. Earlier, there might've been some bargains, but those days seem gone. The limited options are driving competition further up.”
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