Just the Facts: Four Key Housing Market Takeaways for This Week
- Home-buying demand is up 22% from pre-pandemic levels after seven straight weeks of gains.
- Sellers are slowly returning, but new inventory can’t keep pace with demand and the number of homes for sale is down 24% compared to the prior year.
- Mortgage rates near 3% and inventory shortages drove prices up 7% and have increased competition for homes. Noah Goldberg, a Redfin agent in New Jersey said, “I was working with a buyer to purchase a home for over a million dollars that had been on the market more than 100 days. We’d negotiated a good deal and out of nowhere another buyer swooped in and bid it up.”
- Rising prices and the freedom to work from home are causing buyers to reconsider their options. Pageviews on Redfin.com for cities under 50,000 people and rural areas are growing 5x faster than pageviews for cities with more than one million people.
Home-buying demand up seven straight weeks
It’s a difficult time to be reporting on the recovery in the housing market while the country grieves over the unjust killings of George Floyd, Breonna Taylor, Ahmaud Arbery and many others. In cities across the nation, Americans marched to protest systemic racism and a long history of violence and brutality targeted at Black people in America. Redfin supports the protests, and we know we need to do more to help end the cycle of racism in America.
We decided to publish this week’s update, because we also feel an obligation to people who are trying to decide whether to buy or sell a house; to drop their home’s price or hold out for a better offer; to make decisions about what is generally people’s largest financial investment.
For the full week ended May 31, demand was up 22% from pre-pandemic levels in January and February, on a seasonally-adjusted basis. This marks the seventh straight week Redfin’s home-buying demand has increased since it hit bottom in mid-April.
When looking at demand on a daily basis, Redfin’s home-buying demand peaked on Thursday May 28, at 25% above pre-pandemic levels on a seasonally-adjusted basis. By Sunday, May 31 it was up only 17%. Whether people were out protesting, watching the news, or following the curfews that were imposed in many cities, national attention shifted away from home-buying in the second half of the week.
If curfews are lifted and streets are re-opened by next week, we should have a clearer view on whether homebuyers will return to the market with the same energy they had previously, or whether there will be longer-lasting effects on home-buying demand.
Sellers who don’t have to sell are starting to join the market
During the height of the pandemic, very few people who didn’t have to sell put their homes up for sale. Now we’re starting to see a resurgence in sellers who want to sell. Mary Bazargan, a Redfin listing agent in Washington, D.C. said, “It’s a mix. About half of my sellers are moving for a new job or heading out to the suburbs for a bigger home. But a lot of them are landlords that just don’t want to deal with it any more.”
Over the past few years, rising rents and rock-bottom interest rates have made it attractive for home-owners to keep their old place and rent it out rather than sell it, but now many sellers may be looking to simplify their lives as they adapt to life during the pandemic.
Despite the increased interest in selling, new listings were still down 22% for the week ended May 31 compared to the same week last year. Many sellers who do decide to list still have health concerns about buyers in their homes. Some sellers are choosing to move out for the first week or two, heading to the in-laws or to an airbnb, and hoping to catch a buyer before they have to come back.
Prices are up because listings still can’t keep up with buyer demand
After seven straight weeks of gains in home-buying demand and sellers returning to the market more cautiously, the total number of homes for sale was down 24% for the week ended May 31 compared to the same week last year.
Noah Goldberg, a Redfin agent in New Jersey said, “The competitiveness in the market has picked up noticeably. I was working with a buyer to purchase a home for over a million dollars that had been on the market more than 100 days. We’d negotiated a good deal and out of nowhere another buyer swooped in and bid it up.”
Low mortgage rates are motivating many buyers to move now. Rates for a 30-year fixed-rate mortgage are still hovering near all-time lows around 3%, keeping down monthly payments even as prices rise. The median sale price for the week ended May 24 was up 2% compared to the same week the prior year. That is a smaller gain than we’ve seen in recent weeks, but it’s notable because most of those deals were struck in mid-April when the pandemic was at its height.
Looking ahead, the median asking price for new listings is up 7% for the week ended May 31 compared to the same week last year. There’s a good chance sale price gains in late June and July will accelerate as the homes hitting the market now start to sell.
Rising prices and working from home give buyers the motivation and opportunity to get creative
To contend with rising home prices, we’re hearing more stories of buyers purchasing a home with space for their parents or moving in near family to be closer to help with the kids. People are trading a condo in LA for a single-family home in Dallas, selling in D.C. and heading to Atlanta, or moving from Denver to Detroit.
In many cases, buyers aren’t looking in big cities, at all. In April and May, pageviews on Redfin.com for homes in cities with less than 50,000 residents and rural areas are growing five times faster than pageviews for homes in cities and suburbs with more than a million people.
As more companies embrace fully-remote or part-time work-from-home policies, buyers are willing to move a little further away from the office, looking for a bigger home and more outdoor space. Mike Welk, a RedfinNow asset manager in Denver, said, “I am hearing a lot more from people who are looking further out of Denver. They think, ‘If I only have to go into the office three days a week, I can drive an extra 10-15 miles, save a bundle, and get a bigger place.’”