Austin Business Journal shares, "although the spring 2023 housing market has little resemblance to the frenzied 2021 buying and selling season, there's evidence some markets and types of houses are starting to become more competitive, owing mostly to a lack of inventory.
Forty-eight percent of homes sold nationally during the four weeks ending April 30 went under contract within two weeks, down from 51% a year earlier but up from 46% a month prior, Seattle-based Redfin Corp. (Nasdaq: RDFN) recently found.
While demand for housing among buyers exists, a key reason for increased competition for certain homes is because inventory remains extremely tight. Owners who locked in record-low mortgage rates during the pandemic are hanging onto their homes, exacerbating a persistent national housing shortage.
Redfin found new listings in April were down 23% from a year earlier, which is the second biggest decline since the start of the pandemic and outpacing the 17% year-over-year decline in pending sales.
Daryl Fairweather, chief economist at Redfin, said bidding wars are coming back but only for what are deemed by buyers as the most desirable homes.
"Single-family starter homes that are close to transit and jobs are still attracting bidding wars," she continued.
That's also evidenced by pricing for homes in the bottom third of the price distribution, which is up 8% year-over-year nationally, Zillow Group Inc. (Nasdaq: ZG) recently found. Markets like Richmond, Virginia; Miami; New Orleans and Louisville, Kentucky, have seen their low price-tier home values grow 10% since last year.
At the same time, middle and top-tier homes on the price spectrum are seeing more price cuts and fewer homes selling above list price compared to pandemic years, Zillow found.
The total number of homes for sale has also declined in the past four weeks, suggesting buyers are snatching up homes faster than they are being replenished by new listings, according to Redfin.
Despite declining 22.9% on a yearly basis, new listings were up 9.2% on a month-over-month basis in April. Pending home sales increased 3% on a monthly basis while down 16.8% year over year.
It's somewhat surprising to see bidding wars and competition for houses heating up, Fairweather said, mostly because buyers are generally sensitive to interest-rate increases. But the uptick in demand shows how much pent-up demand for housing there continues to be, she added.
Nicole Bachaud, senior economist at Zillow Inc. (Nasdaq: ZG), also said the spring housing market feels more competitive than what was initially expected for this year.
In March 2023 — the most recent data available for Zillow — 30% of homes sold for above list price nationally, the first increase since October. Homes selling for more than their asking price is one indication of a housing market's competitiveness, Bachaud said, although 30% is well below shares seen throughout 2021.
"It's certainly not going to be anything like 2021 but we are seeing this cooldown has kind of found its bottom," Bachaud said.
The current volatility of interest rates is also making it tough for buyers to discern what kind of house they can afford — one day, a buyer may qualify for a mortgage rate, but they may not the next.
Bachaud said there were a number of buyers banking on the housing market to crash to swoop in and buy a house for cheap compared to today's standards. But because of continued demand from buyers and a lack of inventory, that hasn't panned out.
"It's not so easy to be a buyer in this market," Bachaud said. "Maybe you could have gotten some deals a few months ago (but) you’re not seeing that anymore ... (We're) far, far below normal trends for this time of year; that’s constricting the options out there and creating more of this competition.""
Source: Austin Business Journal
Written by: Ashley Fahey
Published: May 8, 2023
Posted by Grossman & Jones Group on
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