After hitting a new low in mid-November, the housing market has started to recover, but we’re not quite out of the woods yet, according to a new Redfin report.
The company says it’s seeing a 17% increase in potential buyers requesting home tours, and those contacting agents looking for homes has increased 13% from November. Despite the increases, home tours were down 23% from last year while requests were down 27% — but overall it’s an improvement as both were down 40% in November.
All this activity means more home sales, and in some markets bidding wars are back, including in Seattle, central Florida and Richmond, Virginia, according to the report. Despite homebuyer demand down from its 2022 high, there has been a shift in the market as “well-priced listings are selling quickly.”
Angela Langone, a Redfin agent in San Jose, California, says she’s seen more homes go under contract this month than in the entire fourth quarter of 2022.
“I’m getting texts and emails from prospective buyers now that the new year is in full swing and the holidays are behind us,” Langone said. “Mortgage rates aren’t stopping people as much as they were at the end of 2022, now that they’re down from their peak and sellers are more willing to negotiate. Some buyers are having luck winning a home for under asking price, especially if it has been on the market for several weeks, but those days may be numbered.”
Bidding wars are returning in some markets and that’s mainly due to low inventory levels. While homebuyers are ready to get in the game, sellers are slower to jump in making inventory a consistent issue even into the first months of 2023, but it’s selective. If a home is affordable, in a suburb, a single-family, move-in ready and priced right, then expect a bidding war, while other properties are remaining on the market longer.
Seattle and Tampa are seeing more bidding wars this month than they had, and the report says it may take some time before we see them start to trend nationally. Homes in Florida’s Palm Beach are getting multiple offers as well, but competition there is nothing like it was in 2021, according to the report.
Despite the uptick in demand for single-family homes, the market for condominiums and more expensive properties isn’t as strong. Redfin found that to close deals, the sellers of more expensive homes and condos are offering buyers incentives.
That single-family home demand is going to continue to grow as sellers have been slower to return than buyers, according to the report, which found “would-be sellers are more sensitive to elevated rates because 85% of mortgage holders have a rate far below today’s level of roughly 6%.”
And while Redfin has seen improvement in the number of people contacting agents to sell their homes, there hasn’t been a significant impact on listings nationwide.
During the four weeks ended Jan. 22, new listings fell 18%, the smallest decrease in three months.
Seattle Redfin real estate agent Shoshana Godwin says “homeowners are scared to list because they previously heard that there’s no demand from buyers. That’s making the market competitive again because there’s just no inventory.”
Redfin economists say they expect more sellers to return as demand increases and price growth stabilizes.