In a new twist in the real estate market, listings have surged 10% year over year in the four weeks ending February 18, marking the most significant increase in two months, according to a recent report by Redfin, the technology-powered real estate brokerage. This surge appears to be driven by sellers aiming to capitalize on escalating prices, which have seen a 6% year-over-year increase, the largest jump since October 2022.
However, despite the rise in listings and prices, many prospective buyers remain on the sidelines. Mortgage-purchase applications plunged 10% from the previous week as the daily average mortgage rates breached the 7% mark for the first time since mid-December. Concurrently, pending home sales are down 7% year over year, echoing the declines observed since mid-January.
Despite this slowdown, some potential homeowners are dipping their toes into the initial stages of home buying, as indicated by a slight uptick in Redfin’s Homebuyer Demand Index, which tracks requests for tours and home-buying assistance. This rise comes after a drop in mid-January due to severe weather conditions.
Redfin agents have noted a shift in buyer preferences, with a majority now favoring move-in ready homes to avoid additional expenses on repairs and renovations on top of high monthly payments. This trend has led to agents advising sellers to consider offering financial concessions to buyers as a strategy to ease the burden of soaring 7% mortgage rates.
Shauna Pendleton, a Redfin Premier agent in Boise, ID, shared her perspective: “I tell every one of my sellers to have an open mind and put on their buyer’s hat. Nine times out of 10, buyers are asking for a concession in their initial offer right now—and usually the seller needs to accept it to seal the deal.” Pendleton added that the most common concessions include a mortgage-rate buydown and covering closing costs, primarily for homes priced under $500,000.
In summary, the current real estate landscape is a mixed bag. While sellers are leveraging high prices to list their properties, the steep rise in mortgage rates has deterred many prospective buyers. However, the early stages of home buying have seen a slight increase in activity, suggesting that some house hunters are testing the waters. The trend towards move-in ready homes and financial concessions indicates a shift in strategies for both buyers and sellers as they navigate this challenging market.
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