The housing market has begun to recover after hitting a low point in the second week of November, according to a new report from Redfin.
The number of Redfin customers requesting first tours has improved 17 percentage points from the November trough, and the number of people contacting Redfin agents to start the homebuying process has improved 13 points.
Compared with a year ago, home tours and requests for service are down 23 percent and 27 percent, respectively, but that’s an improvement from November, when both were down 40 percent.
Redfin agents report that bidding wars are back in some markets, including Seattle, central Florida and Richmond, Va.
Homebuyer demand remains down from its early 2022 highs, but the market has shifted into a new phase and well-priced listings are selling quickly, according to Redfin.
Redfin attests that buyers have acclimated to the 6 percent mortgage rate, which feels like a relief after watching affordability erode as rates surpassed 7 percent in the fall. Some buyers are even scoring a rate that starts with a 5, an important psychological threshold, while others are opting for an adjustable-rate mortgage or getting a rate buydown as a seller concession.
“I’ve seen more homes go under contract this month than in the entire fourth quarter. Listings that were stagnant in November and December are suddenly getting one to two offers,” San Jose, Calif., Redfin agent Angela Langone said in a release. “I’m getting texts and emails from prospective buyers now that the new year is in full-swing and the holidays are behind us. 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.”
Mortgage applications are up 28 percent from early November as the average 30-year-fixed mortgage rate has declined to 6.15 percent from its November peak of 7.08, the largest 10-week decline since 2009.
That has sent the typical homebuyer’s mortgage payment down 10 percent (about $180) since fall. Pending home sales rose 3 percent in December from November on a seasonally-adjusted basis—the first month-over-month increase in 14 months.
Bidding wars are back in certain markets
While demand is coming back in some pockets of the country, it’s selective: homes that are eliciting bidding wars tend to be affordable, suburban, single-family, move-in ready and most importantly, priced competitively. Almost everything else is sitting, Redfin said.
Preliminary data on the share of Redfin agents’ offers facing bidding wars points to small upticks in the Seattle and Tampa markets this month. As this is an uneven trend, Redfin expects it to take some time before bidding wars nationally show an upward trend.
“Bidding wars are back in Seattle,” local Redfin real estate agent Shoshana Godwin said. “One of our Issaquah listings got 12 offers and is under contract for $155,000 over the $1.4 million list price. The buyer waived every contingency, handed over $300,000 of earnest money and is letting the seller stay for free for two months after closing. Another home in Seattle’s popular Ballard neighborhood was recently delisted after sitting on the market for over three months. The seller relisted it last week and it went pending in under a day.”
Eric Auciello, Redfin’s team manager in Tampa, has seen three modest single-family homes priced around $300,000 wind up in bidding wars in central Florida this month, with 16, 17 and 23 competing offers, respectively.
Further south, in Palm Beach, most well-priced homes are getting multiple offers, but competition is nowhere near 2021 levels, according to local Redfin agent Elena Fleck: “Homes in coveted locations with recent upgrades or renovations–those are the homes getting multiple offers.”
“Homes that are in desirable school districts, priced well and in good condition are going off the market within days or even hours,” Richmond Redfin agent Blake Edwards said. “Anything under $400,000 will sell within the weekend. Even the $1 million houses that are in great condition are selling within days. It really is property specific right now.”
But in Boise, Idaho, bidding wars are still almost non-existent—despite the fact that prices have been falling year-over-year since November, according to local Redfin agent Shauna Pendleton. It’s taking between one and two weeks to get an offer after a showing, she said.